Two manufacturing firms, located in cities 90 miles apart. Both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck operating costs of $1.20 a mile.

a) How much each firm could save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip?

b) What would the savings be if there was a $0.20 per mile emission tax on all business truck travel?

Question

Business

Kiera

23 January, 00:22

Two manufacturing firms, located in cities 90 miles apart. Both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits (the round trip takes all day) and each firm has truck operating costs of $1.20 a mile.

a) How much each firm could save weekly if each sent its truck twice a week and hauled the other firm's cargo on the return trip?

b) What would the savings be if there was a $0.20 per mile emission tax on all business truck travel?

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Answers (1)

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Zain Ochoa · Answer 1

Single trip Truck Operating Cost = Distance / times Per mile Cost = 90*1.2 = 108

Single Round Trip Truck Cost Operating Cost = Single Trip Truck Operating Cost / times 2 = 108*2 = 216

Since, Single Round Truck trip takes 1 day and driver cost given in days, we can calculate the total cost by the following formula:

Single Round Truck Trip Total Cost = Single Round Trip Truck Cost Operating Cost + Driver Salary = 216 + 275 = 491

Weekly Transportation cost to each manufacturing firm = No of Round Trip / times Round Trip Cost = 4*491 = 1964

Now, if each manufacturer send its truck twice a week and hauled the other firm's cargo on the return trip, then

New Weekly Transportation cost to each manufacturing firm = 2 / times Round Trip Cost = 2 * 491 = 982

So, Weekly saving = 1964 - 982 = 982