Entrepreneurship and Small Business Management

Air Freight

Your business may ship goods to its customers by air freight. Either you or the customer pays the shipping charges. The total cost of shipping goods by air freight includes pickup and delivery to the airport, air freight charges to the city of destination, local delivery from the airport to the final destination, and federal tax, where it applies.

Total Shipping Cost = Pickup Charge + Air Freight Charge + Delivery Charge + Federal Tax

The Forward Auto Company is shipping automotive equipment by air freight. The packaged equipment weighs 635 pounds. Use this information to answer questions 1-7.

1.		Superb Pickup Service charges $5.95 for each 100 pounds or fractional part to transport the equipment to the airport. How many hundreds of pounds will Forward Auto Company be charged for?
			A)	7
			B)	6
			C)	10
			D)	5
2.		What is the total charge for Speedy Pickup to take the equipment to the airport?
			A)	$58.67
			B)	$39.99
			C)	$41.65
			D)	$59.50
3.		The air freight rate is $65.75 per 100 pounds, charged on the actual number of pounds shipped. What is the air freight charge?
			A)	$542.24
			B)	$417.51
			C)	$388.92
			D)	$475.10
4.		Express Delivery Service charges $9.50 per 100 pounds, in increments of 50 pounds, to deliver the equipment from the airport to the final destination. How many hundreds of pounds will Forward Auto be charged for?
			A)	9.5
			B)	6.5
			C)	6.0
			D)	7.0
5.		What is the cost of this delivery service?
			A)	$59.37
			B)	$50.00
			C)	$65.65
			D)	$61.75
6.		There is also a 5% federal tax on the air freight charge because it involves interstate transportation. What is the tax amount?
			A)	$23.74
			B)	$19.77
			C)	$20.88
			D)	$21.91
7.		What is the total shipping cost for Forward Auto to ship the equipment?
			A)	$541.79
			B)	$519.28
			C)	$1,109.71
			D)	$470.07
8.		When Esperanza ships a customer's order by air freight, the federal tax is 4.2% of the air freight charge. The air freight charge is $113.94. What is the amount of federal tax?
			A)	$2.28
			B)	$4.20
			C)	$4.79
			D)	$2.40
9.		On another shipment that Forward Auto Company makes, the pickup charge is $50.40, the air freight charge is $378, the delivery charge is $62.30, and the federal tax is $19.82. What is the total shipping cost?
			A)	$448.22
			B)	$510.52
			C)	$450.52
			D)	$548.22
10.		A crate of books that weighs 420 pounds is shipped by air freight. The air freight rate is $75 per hundred pounds or fractional part. What is the cost of air freight?
			A)	$315
			B)	$300
			C)	$390
			D)	$375
11.		When the books in problem 10 are shipped, the delivery service charges $7.95 per 100 pounds, charged on the actual number pounds delivered. What is the delivery service charge?
			A)	$33.39
			B)	$39.75
			C)	$31.80
			D)	$35.95

Movie Makers, Inc. is sending a shipment of camera equipment that weighs 772 pounds by air freight. Use this information to answer questions 12-17.

12.		At Your Service Pickup charges $7.40 per 100 pounds, charged on the actual number of pounds shipped, to bring the equipment to the airport. What is the pickup charge?
			A)	$74.00
			B)	$57.13
			C)	$59.20
			D)	$47.89
13.		The air freight company charges $68 per 100 pounds, charged in 25 pound increments. What is the charge for air freight?
			A)	$250.25
			B)	$527.00
			C)	$490.88
			D)	$768.00
14.		Delivery Today will deliver the equipment for $8.10 per 100 pounds, charged in 100 pound increments. What is the charge for delivery?
			A)	$55.80
			B)	$59.80
			C)	$64.80
			D)	$70.80
15.		There is a 6% federal tax on the air freight charge. How much does Movie Makers, Inc., pay for tax?
			A)	$35.66
			B)	$41.29
			C)	$33.18
			D)	$31.62
16.		What is the total shipping cost for the camera equipment?
			A)	$680.55
			B)	$720.96
			C)	$650.40
			D)	$599.24
17.		What percent of the total shipping cost is really spent on the air freight charge?
			A)	25.3%
			B)	78.2%
			C)	90%
			D)	77.4%
18.		Panasound Electronics sends a shipment of televisions by air freight. The televisions weigh 325 pounds altogether, and the air freight charge is $88 per 100 pounds, charged on the actual number of pounds. What does Panasound spend on air freight?
			A)	$240.25
			B)	$286
			C)	$275
			D)	$295.75
19.		In problem 18, there is a 5.75% federal tax on the air freight charge. What is the amount of tax?
			A)	$12.33
			B)	$20.56
			C)	$16.45
			D)	$18.30
20.		The Cycle Sisters bike shop has ordered a shipment of unicycles. The unicycle manufacturer will pay for all shipping costs except delivery. The shipment weighs 270 pounds and the delivery service charges $6.80 per 100 pounds, in 50 pound increments. How much does Cycle Sisters pay for delivery?
			A)	$34
			B)	$20.40
			C)	$17
			D)	$17.20