9. New Madrid Chocolate Corporation manufactures bulk chocolate that it sells to Venus CandyCompany. Currently, New Madrid packages and ships their bulk chocolate in 50-pound bars that arethen shipped by truck to Venus. Venus then unpacks the bars, disposes of the packaging, melts thebars, and works the chocolate into smaller retail products. An astute and environmental conscientiousemployee observes that New Madrid could make the chocolate keep it hot or warm and ship it inheated tankers to Venus. This would save cooling and reheating energy cost, packaging cost and timeassociated with these activities. Assume the following cost:• Cooling cost and time for New Madrid $10,000• Packaging cost for New Madrid $20,000Annual transportation cost by truck $50,000 paid by New MadridAnnual transportation cost by train $40,000 paid by New MadridUnpackaging and disposal cost of packaging for Venus $10,000• Reheating cost and time for Venus $30,000How much will New Madrid gain if they approach Venus and Venus agrees to implement this"activity-reducing" plan?How much will Venus benefit financially by implementing this plan?10. Keeping the prior example in mind - please discuss the costs that Uber and Lyft currently save byhaving independent contractors drive their personal automobiles today. Additionally, please discussthe cost that will revert (or are created and shift) to Uber and Lyft if they are successful in shifting toself-driving cars in the future.

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Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 14P

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How much will New Madrid gain if they approach Venus and Venus agrees to implement this "activity-reducing" plan? How much will Venus benefit financially by implementing this plan?