Figure 11-8. Booth Inc.uses Three Delivery Trucks to Transport Finished Parts from Parts

question 11

Essay

Figure 11-8.
Booth Inc.uses three delivery trucks to transport finished parts from its plant to the plants of its customers.The delivery trucks are obtained through a five-year operating lease that costs $12,000 per year per truck.Booth employs 6 drivers who receive an average salary of $36,000 per year,including benefits.Parts are placed in boxes and placed in the trucks.Each truck holds 20 boxes.The average round-trip distance for a delivery is 40 miles.The boxes are retained by the customers.Each box costs $2.00.Fuel for the trucks costs $1.80 per gallon.A gallon of gas is used every 20 miles.A driver can travel 160 miles in an eight-hour shift.Each driver works 40 hours per week and 50 weeks per year.
Refer to Figure 11-8.Assume that the company uses only 90 percent of the activity capacity.The actual costs incurred at this level were:

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Definitions:

Illegal Acts

Actions that are forbidden by law and subject to official punishment.

Physiological Need

A basic bodily requirement.

Basic Requirement

Fundamental needs or conditions that must be met to achieve a goal or maintain a standard.

Drive-Reduction Theory

the idea that a physiological need creates an aroused state (a drive) that motivates an organismto satisfy the need