Pricing and Constibution-Margin Technique The Transnational Trucking Company has

Question

Pricing and Constibution-Margin Technique The Transnational Trucking Company has the following operating resuls to date for 20X1: Operating revenues $50000,000 Operating costs 40000,000 Operating income $10000,000 " A large Boston manufacturer has inquired about whether Transnational would be interested in trucking a large order of its parts to Chicago. Steve Goldmark, operations manager, investigated the situations and estimated that the ""fully allocated"" costs of servicing the order would be $45,000. Using his general pricing formula. he quoted a price of $50,000. The manufacturer replied, ""We'll give you $39,000, take it or leave it. If you do not want our business, we'll truck it ourselves or go elsewhere."" A cost analyst bad recently been conducting studies of how Transnational's operating costs tended to behave. She found that $30 million could be characterized as variable costs. Goldmark discussed the matter with here and decide that order would probably generate cost behavior about the same as Transnational's general operations." 1. Using a contribution-margin technique, prepare an analysis for Transnational. 2. Should Transnational accept the order? Explain.

Explanation / Answer

ANSWER IS AT [PDF] CAPITAL BUDGETING PRACTICE QUIZ www.csus.edu/indiv/p/.../CapBudgetingIn-ClassHandout_000.pdf

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