Boss Company Currently Leases a Delivery Van from Check Enterprises

question 26

Multiple Choice

Boss Company currently leases a delivery van from Check Enterprises for a fee of $250 per month plus $0.40 per mile.Management is evaluating the desirability of switching to a modern, fuel-efficient van, which can be leased from David, Inc., for a fee of $600 per month plus $0.05 per mile.All operating costs and fuel are included in the rental fees.In general, a lease from

• A) David, Inc., is economically preferable to a lease from Check Enterprises regardless of the monthly use.
• B) Check Enterprises is economically preferable below 1,000 miles per month.
• C) Check Enterprises is economically preferable to a lease from David, Inc., regardless of the monthly use.
• D) Check Enterprises is economically preferable above 1,000 miles per month.

---

Definitions:

Reliability

The quality or state of being dependable or capable of performing consistently under specified conditions.

TPM

Total Productive Maintenance; a proactive maintenance approach focusing on improving equipment effectiveness and employee involvement.

TQM

Total Quality Management; a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback.

Maintenance

Activities undertaken to keep equipment or systems functioning efficiently through preventive measures or repairs.