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QUESTION

A delivery company is considering adding another vehicle to its delivery fleet; each vehicle is rented for $350 per day.

A delivery company is considering adding another vehicle to its delivery fleet; each vehicle is rented for $350 per day. Assume that the additional vehicle would be capable of delivering 1,750 packages per day and that each package that is delivered brings in $0.35 in revenue. Also assume that adding the delivery vehicle would not affect any other costs.

Instructions: 

a. What are the MRP and MRC?

Should the firm add this delivery vehicle?  

(Click to select)

Yes

No

b. Now suppose that the cost of renting a vehicle doubles to $700 per day. What are the MRP and MRC?

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