Jennifer Trucking Company Essay Sample

1. Jennifer Trucking Company operates a big rig transit concern in Texas that transports locally adult veggies to San Diego. California. The company owns 5 big rigs and hires local drivers paid fixed wages monthly. regardless of the figure of trips or dozenss of lading that each driver transports each month. The below tabular array nowadayss inside informations about the figure of drivers and the entire lading transported by the company at different staff degrees.

Drivers employedTotal Cargo Transported ( dozenss )
15
212
321
432
540
646
751
850

a. Which inputs are fixed and which are variable in the production map of Jennifer Trucking Company? Over what ranges do at that place look to be increasing. changeless and/or decreasing returns to the figure of drivers employed?

The inputs that are fixed are the driver’s monthly wages. The variable inputs are the sum of trips the drivers take and the sum they haul each clip. Drivers 1. 2. and 3 appear to be presenting a decreasing return due to their low figure of dozenss delivered. Drivers 5. 6. 7. and 8 are increasing returns due to their high weight bringings and driver 4 appears to be changeless.

B. What figure of drivers appears to be most efficient in footings of end product per driver?

Four drivers appear to be most efficient in footings of end product per driver ( drivers 5. 6. 7. 8 ) . Their entire lading transported is merely a few dozenss
between one another.

c. What figure of drivers appears to minimise the fringy cost of transit presuming that all drivers are paid the same wage?

Drivers 1. 2. and 3 appear to be minimising the fringy cost of transit presuming that all drivers are paid the same wage. Driver 4 seems to be within the average. neither minimising the fringy cost of transit nor maximising efficiency.

2. The Palms Dry Cleaning Shop in Fort Lauderdale. Florida. faces a extremely seasonal demand for its services. as the snow-birds retirees’ flock to Florida in mid-fall to bask the mild winter conditions and so return to their chief places in mid-spring. Given this seasonality. Palms tries to maintain the operating expense costs every bit low as possible and hence. frequently uses seasonal contracted labour to adult male its operations. The following tabular array shows the labour costs in each month of operation over the past 12 months every bit good as the entire figure of garments that were dry-cleaned in each month. Palms wage fixed rewards per hr to each employee. and we can presume that the costs of other variable inputs ( such as chemicals. electricity. etc ) have remained changeless.

MonthTVC ( $ ) Garments Cleaned
June35. 4904. 500
July42. 4705. 575
August48. 9806. 300
September52. 5306. 525
October37. 4805. 325
November33. 5104. 050
December31. 8502. 850
January27. 8602. 450
February22. 1601. 525
March19. 520925
April25. 9601. 925
May32. 9803. 500

a. Derive mean variable cost ( AVC ) information from the information in this tabular array.

Average Variable Cost in this instance would be derived by taking the Total Variable Cost ( TVC ) / measure of end product.

So for June the AVC = 35. 490 / 4. 500 = 7. 89
The AVC of the information in this tabular array would be:
AVC = Total TVC / Total Garments Cleaned
= 410. 790 / 45. 450
= 9. 038

B. Use gradient analysis to supply an estimation of eleven informations points that seem to stand for the MC curve over this scope of end products. Plot these informations points and study in estimated MC and AVC curves that seem to outdo fit these informations points.

c. Suppose that demand is estimated to travel from its present ( May ) degree of 3. 500 units to 4. 000 units following month ( June ) . What is the incremental cost of run intoing this demand?

The incremental cost of run intoing this demand would be the difference in cost of making 3. 500 units and making 4. 000 units. Since the tabular array provides costs for increasing from 3. 500 units in May to 4. 500 units in June. I will utilize those costs. In this instance the incremental cost of run intoing this demand = 32. 980 – 35. 490 = $ 2. 510.

d. Assuming that Palm’s monetary value to dry clean a garment has been changeless at $ 15 over the past twelvemonth. and will stay at that degree. what part to operating expenses and net income can it anticipate in June?

Given that the monetary value to dry clean a garment has been changeless over the past twelvemonth. and will stay at that degree. the part to overhead would be attributed to the figure of employees that will necessitate to be kept on staff to maintain concern traveling. Net incomes will diminish with demand at this clip due to people returning place for the summers. Therefore. as overhead additions. net income lessenings.

3. Over the past 12 months the Four Winds Novelty Company house has recorded its cyberspace gross revenues ( peers monthly end product degrees ) and its monthly sum variable costs ( TVC ) for a peculiar freshness point as shown in the undermentioned tabular array. Gross saless have grown over this period with comparatively few dazes due to unmanageable conditions. political and featuring events. This on-line retail merchant carries no stock lists ; when it receives a pre-paid online order from a client. it merely buys the merchandise from a provider and transport it out to the client.

Gross saless = OutputTVC ( $ )
102. 813201. 953
176. 163340. 608
196. 121377. 940
222. 885432. 863
226. 356441. 714
296. 416629. 267
378. 446867. 596
450. 6661. 103. 807
579. 6961. 701. 125
607. 0821. 917. 861
624. 6802. 195. 352
636. 1332. 479. 195

a. Using arrested development analysis. happen an equation that best fits the information to stand for the TVC map.
Y’ = ByxX + Ayx
= 3. 98677X – 596. 828
B. At what sales/output degree will marginal costs ( MC ) reach a lower limit?
About 185. 000 units.
c. Estimate the value of TVC for sales/output degree 250. 000 units. and cipher the 95 % assurance interval for your estimation.
About $ 500. 000