Business, 15.02.2021 20:10 ashleymspears
A last-mile delivery service is looking into increasing capacity by purchasing new delivery vans. Two vans are being considered. Van A costs $50,000 with a variable cost of $12.00 per average delivery, all inclusive of gasoline, insurance, etc. Van B costs $70,000 with a variable cost of $11.00 per average delivery. The company is also considering a courier service which requires a $60,000 non-refundable joiner fee and a variable cost of $13.00 per average delivery. Last but not least the company is also considering a new drone delivery option that requires an investment in infrastructure of $100,000 and a delivery cost of $15.00 per delivery, but costs are expected to drop sharply in the foreseeable future. What of the following is NOT true?
a. In the long run, Option B with its $11.00 variable cost is the best option
b. The drone option should be chosen because it is the least expensive in terms of both fixed and variable cost.
c. Option A requires the smallest initial cash outlay, followed by using the courier service, followed by Option B.
d. There is no point of indifference/break even between Option A and using the courier service
Answers: 3
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