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

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 5-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% of the activity capacity. The actual costs incurred at this level were: