Variable Cost and Total Contribution Essay

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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
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Total contribution per round trip for each vessel
Note: Cargo cost is total of ligterage, steve doring and crainage costs
For Blik these costs are: (0.81*4500)=$3645
For Singapore costs are: (0.62*4500)=$2790
For Tashtego Balik-Singapore Singapore-Balik
Revenue (3950*$5.10)=$20145 (3150*$2.7)=$8505
Less: total costs
Ship cost(1415) (2.5*1415)=$3538 (1415*1)=$1415
Trip cost (1575+73+701)=$2349 (900+126+701)=$1727
Cargo cost

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