Clancy Van Lines Is Considering the Acquisition of Two New

question 50

Essay

Clancy Van Lines is considering the acquisition of two new trucks. Because of improved mileage, these vehicles are expected to have a lower operating cost per mile than the trucks the company plans to replace. Management is studying whether the firm would be better-off keeping the older vehicles or going ahead with the replacement, and has identified the following decision factors to evaluate.
1. Cost and book value of the old trucks
2. Moving revenues, which are not expected to change with the acquisition
3. Operating costs of the new and old vehicles
4. New truck purchase price and related depreciation charges
5. Proceeds from sale of the old vehicles
6. The 8% return on alternative investments that Clancy will forego by tying up cash in the new trucks
7. Drivers' wages and fringe benefits
Required:
Classify the seven decision factors listed into the following categories (note: factors may be used more than once).
A. Relevant costs.
B. Opportunity costs.
C. Sunk costs.
D. Factors to be considered in the decision.

Understand the evolving landscape of workplace dynamics towards 2020 and beyond.

Recognize the importance and goals of comprehensive diversity programs.

Understand the concept and importance of issues management in relation to economic and technological challenges.

Recognize the role and implications of the political-legal environment on business management.

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Definitions:

Legislative Committee

A small group of lawmakers within a legislative body tasked with handling specific duties, such as reviewing legislation, conducting hearings, and making recommendations to the larger assembly.

Special Purpose

A specific, defined objective or project that an entity is created to achieve or address, often seen in organizations, trusts, or government programs.

Divided Government

A scenario wherein the presidency is controlled by one political party, while the other party controls one or both houses of Congress, leading to potential legislative gridlock.

Republican

A member or supporter of the Republican Party, advocating for its conservative ideologies and political principles.