RoadRangers is a passenger coach line that contracts with larger, well-known lines to provide transportation across the United States. RoadRangers owns 65 buses, and currently has contracts for 55 of those buses. The other lines pay RoadRangers $750,000 per year to provide carrier services for their passengers.
RoadRangers is considering a new contract where they would provide 10 buses to a new company for $300,000 per year. Each RoadRangers bus incurs yearly costs of $90,000 for labor, $50,000 for fuel, $80,000 in fixed overhead, and $150,000 in variable overhead.
What would be the differential gain or loss on this contract?

Question

RoadRangers is a passenger coach line that contracts with larger, well-known lines to provide transportation across the United States. RoadRangers owns 65 buses, and currently has contracts for 55 of those buses. The other lines pay RoadRangers $750,000 per year to provide carrier services for their passengers. 
RoadRangers is considering a new contract where they would provide 10 buses to a new company for $300,000 per year. Each RoadRangers bus incurs yearly costs of $90,000 for labor, $50,000 for fuel, $80,000 in fixed overhead, and $150,000 in variable overhead.
What would be the differential gain or loss on this contract?

Quizplus · Accepted Answer

The Answer of RoadRangers is a passenger coach line that contracts with larger, well-known lines to provide transportation across the United States. RoadRangers owns 65 buses, and currently has contracts for 55 of those buses. The other lines pay RoadRangers $750,000 per year to provide carrier services for their passengers. 
RoadRangers is considering a new contract where they would provide 10 buses to a new company for $300,000 per year. Each RoadRangers bus incurs yearly costs of $90,000 for labor, $50,000 for fuel, $80,000 in fixed overhead, and $150,000 in variable overhead.
What would be the differential gain or loss on this contract?

RoadRangers Is a Passenger Coach Line That Contracts with Larger