Easter Talon Transport - Relevant Costing
Eastern Talon Transport Relocation Analysis: The Concepts of Relevant Costing
Case Study 1 Report
Prepared By:
Executive Summary
Companies always strive to create value for their customers. In the Canadian trucking industry, over $30 billion in revenues were generated by for-hire companies such as Eastern Talon Transport and to attain a sizeable share of these revenues, it must also strive to create value for it’s customers. In 2004, value is more important than ever. Trade activity between Canada and the United States declined and has resulted in a 1% decline in revenues. With rising costs of fuel and insurance, profitability within the industry begins to slide. Both of these factors have caused Eastern Talon Transport to consider options to reduce costs.
The alternative most favoured is to move long-haul dispatch operations from Laval, Quebec to Mississauga, Ontario. The report considers what benefits and set-backs would result in this move, and that ultimately moving operations to Mississauga is recommended as the most beneficial scenario for ETT.
This report involves analysis of both qualitative and quantitative factors. In moving operations, productivity increases by 23%. As a direct result, head count can be reduced and a savings in salary expenses of $676,000 will be seen, in addition to savings of $500,000 in the lease of Laval office space. Costs are also reviewed and it is determined that a one-time of $1,768,500 would be incurred in the move and savings would be realized after approximately 1.5 years.
Introduction:
The purpose of this report is to establish the feasibility and justification of moving Eastern Talon Transport’s long-haul dispatch operations from Laval, Quebec to Mississauga, Ontario. A recommendation will be made subsequent to, and in consideration of a review of both qualitative and quantitative analysis.
Quantitative Analysis
Size of the Long-haul
Case Study 1 Report
Prepared By:
Executive Summary
Companies always strive to create value for their customers. In the Canadian trucking industry, over $30 billion in revenues were generated by for-hire companies such as Eastern Talon Transport and to attain a sizeable share of these revenues, it must also strive to create value for it’s customers. In 2004, value is more important than ever. Trade activity between Canada and the United States declined and has resulted in a 1% decline in revenues. With rising costs of fuel and insurance, profitability within the industry begins to slide. Both of these factors have caused Eastern Talon Transport to consider options to reduce costs.
The alternative most favoured is to move long-haul dispatch operations from Laval, Quebec to Mississauga, Ontario. The report considers what benefits and set-backs would result in this move, and that ultimately moving operations to Mississauga is recommended as the most beneficial scenario for ETT.
This report involves analysis of both qualitative and quantitative factors. In moving operations, productivity increases by 23%. As a direct result, head count can be reduced and a savings in salary expenses of $676,000 will be seen, in addition to savings of $500,000 in the lease of Laval office space. Costs are also reviewed and it is determined that a one-time of $1,768,500 would be incurred in the move and savings would be realized after approximately 1.5 years.
Introduction:
The purpose of this report is to establish the feasibility and justification of moving Eastern Talon Transport’s long-haul dispatch operations from Laval, Quebec to Mississauga, Ontario. A recommendation will be made subsequent to, and in consideration of a review of both qualitative and quantitative analysis.
Quantitative Analysis
Size of the Long-haul
References: 1. Corporate Income Tax Rate Database (web) http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1197301474421&lang=eng#f2