Cost Factor Site A Site B Average hauling distance Monthly rental of site Cost to set up and remove equipment Hauling expense Flagperson 4 miles 3 miles $2,000 $7,000 $15,000 $2.75/yd³-mile $2.75/yd³-mile Not required $50,000 $150/day
In connection with surfacing a new highway, a contractor has a choice of two sites on which to set up the asphalt-mixing plant equipment. The contractor estimates that it will cost $2.75 per cubic yard mile (yd3-mile) to haul the asphalt-paving material from the mixing plant to the job location. Factors relating to the two mixing sites are as follows given in the shown table (production costs at each site are the same): The job requires 50,000 cubic yards of mixed-asphalt-paving material. It is estimated that four months (17 weeks of five working days per week) will be required for the job. Compare the two sites in terms of their fixed, variable, and total costs. Assume that the cost of the return trip is negligible. Which is the better site? For the selected site, how many cubic yards of paving material does the contractor have to deliver before starting to make a profit if paid $12 per cubic yard delivered to the job location?
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