As the Owner of a Rent-A-Car Agency You Have Determined

question 43

Essay

As the owner of a rent-a-car agency you have determined the following statistics:
The gross profit is $40 per car per day rented.When there is demand for a car when none is available there is a goodwill loss of $80 and the rental is lost.Each day a car is unused costs you $5 per car.Your firm initially has 4 cars.
a.Conduct a 10-day simulation of this business using Row #1 below for demand and Row #2 below for rental length.

b.If your firm can obtain another car for $200 for 10 days,should you take the extra car?

---

Definitions:

Time-Driven Activity-Based Costing

A costing method that assigns costs to products based on the estimated amount of time resources are used.

Customer Service Department

A division within a company that handles inquiries, complaints, and orders from customers, aiming to provide satisfaction and support.

Unused Capacity

Portions of a company's resources or potential that are not being used at full efficiency or are idle.

Capacity Analysis

The assessment of a company's ability to produce goods or deliver services, compared to its potential or actual demand.