Microtech Incorporated has decided to package its cell phone in a smaller, recyc
ID: 374702 • Letter: M
Question
Microtech Incorporated has decided to package its cell phone in a smaller, recyclable package. Additionally, the company will discontinue the practice of shipping each phone with a 250-page user manual and instead will make the manual available online. These changes will result in a lighter, but more difficult package for shippers to handle. The weight of each packaged phone has dropped from 1.5 pounds to 0.5 pounds as a result of these changes and the freight classification has worsened from 60 to 70. Use the table below to calculate the difference in Microtech's monthly shipping charges if the company ships 10,000 phones per month.
Class
<500 lbs
500 lbs
1,000 lbs
2,000 lbs
5,000 lbs
10,000lbs
>or = to 20,000 Lbs
50
37.73
31.15
26.68
25.34
19.34
17.31
11.52
55
40.63
33.55
28.73
27.3
20.82
19.15
12.74
60
43.55
35.96
30.79
29.26
22.32
20.99
13.96
65
46.13
38.1
32.63
31
23.64
22.3
14.83
70
49.1
40.55
34.72
32.99
25.17
24.13
16.05
77.5
52.91
43.69
37.41
35.55
27.12
26.24
17.45
85
57.09
47.15
40.37
38.36
29.26
28.86
19.2
92.5
61.48
50.77
43.47
41.32
31.5
31.22
20.76
100
66.3
54.75
46.87
44.55
33.98
33.85
22.51
Before the changes in packaging, shipping costs are $ ____ per month (Enter your response rounded to two decimal places.)
After the changes in packaging, shipping costs are $_____ per month (Enter your response rounded to
Thus, the new packaging will ( lower / raise )? shipping costs by $ ______ per month (Enter your response rounded to two decimal places.)
Class
<500 lbs
500 lbs
1,000 lbs
2,000 lbs
5,000 lbs
10,000lbs
>or = to 20,000 Lbs
50
37.73
31.15
26.68
25.34
19.34
17.31
11.52
55
40.63
33.55
28.73
27.3
20.82
19.15
12.74
60
43.55
35.96
30.79
29.26
22.32
20.99
13.96
65
46.13
38.1
32.63
31
23.64
22.3
14.83
70
49.1
40.55
34.72
32.99
25.17
24.13
16.05
77.5
52.91
43.69
37.41
35.55
27.12
26.24
17.45
85
57.09
47.15
40.37
38.36
29.26
28.86
19.2
92.5
61.48
50.77
43.47
41.32
31.5
31.22
20.76
100
66.3
54.75
46.87
44.55
33.98
33.85
22.51
Explanation / Answer
Before Change in Packaging :
Total weight = 1.5 Pounds/ phone x 10,000 = 15,000 Pounds
Unit freight rate for 15,000 Pounds ( Greater Than 10,000 Pounds and less than 20,000 Pounds) for freight class 60 = 13.96
Hence gross freight payable = 15,000 x 13.96 = $ 209,400
After change in packaging :
Total weight = 0.5 Pound / phone x 10,000 = 5,000 Pound
Unit freight rate for 5000 Pound in freight class 70 = 25.17
Hence , Gross freight payable = 25.17 x 5000 = $ 125,850
Thus, new packaging will LOWER the shipping cost by = $209,400 - $125,850 = $83550
BEFORE CHANGE IN PACKAGING , SHIPPING COSTS ARE = $209,400
AFTER CHANGE IN PACKAGING , SHIPPING COSTS ARE = $125,850
NEW PACKAGE WILL LOWER SHIPPING COST BY = $83550 PER MONTH
BEFORE CHANGE IN PACKAGING , SHIPPING COSTS ARE = $209,400
AFTER CHANGE IN PACKAGING , SHIPPING COSTS ARE = $125,850
NEW PACKAGE WILL LOWER SHIPPING COST BY = $83550 PER MONTH