Variable Cost and Total Contribution

Topics: Variable cost, Costs, Cargo Pages: 3 (606 words) Published: May 2, 2013
1. In question 1, I have assumed its only the Tashtego that makes the trip of Balik to Singapore and back. I have also assumed the relevant cost is the cargo cost only. Therefore, profit contribution of carrying I ton of tapioca from Balik and Singapore:

Expected revenue $5.10 Less freight cost (0.25+0.56) 0.81 Profit Contibution 4.29

From Singapore to Balik:

Expected Revenue $2.70 Less freight cost (0.16+0.32+0.14) 0.62 Profit Contribution 2.08

2. Total contribution of Tashtego for round trip is:
From Singapore to Balik=(2.08*3150)= $6552
From Balik to Singapore=(4.29*3950)= 16946
Total contribution 23498

If we assume same contribution profit as Tashtego, then big vessel total contribution is: From Singapore to Balik=2.08*6850)= $14248
From Balik to Singapore=(4.29*6850)= 29387
Total Contribution 43635

3. Incremental trip costs of sending Tashtego on a round trip between Singapore and Balik is:
Tashtego Trip cost
Note: Tashtego take 2.5 days in balik and 1 day in singapore

Balik Singapore Total Portage (4500*0.14*2.5)=1575 (4500*0.2*1)=900 $2475 Lighthouse 73 126 199 Sea bunkering(0.73*1920 roundtrip)= 1402 Total per trip...
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