Case Essay

2727 Words Mar 18th, 2014 11 Pages
2014 STUDENT C ASE C OMPETITION
The Student Case Competition is sponsored annually by IMA® to provide an opportunity for students to interpret, analyze, evaluate, synthesize, and communicate a solution to a management accounting problem.

Starfire’s Dilemma

Capacity at What Cost?
By Thomas L. Albright, CPA; Paul E. Juras, CMA, CPA; and Russ Elrod

F

ounded in 1968 by Alan James, Starfire Trucking Company has grown into a sizeable operation with 90 trucks and 180 trailers. Recently,
FHP Technologies, Starfire’s largest customer, submitted a proposal to James to add delivery routes that would improve the efficiency of FHP’s supply chain. With Starfire already operating at (or near) full capacity, James is uncertain that
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And if a driver assists with unloading a trailer, an extra
“lumper” fee is charged. If a truck sits idle at the dock for more than two hours, customers can be charged a fee that is classified as detention revenue. Placing a detention revenue clause in the contract encourages customers to load trailers efficiently in order to avoid further constraints on a trucking line’s tractor capacity.
Flatbed loads often require extra work or care that incurs additional fees. Companies typically charge a tarping fee for certain flatbed loads that would be damaged by rain and must be covered, such as drywall, unpainted steel,

Table 1: Starfire Income from Operations
Starfire Trucking Company
Income from Operations for the year ended
December 31, 2012
FYE
12/31/2012

Per mile

$20,925,280

$1.86

REVENUE
Line Haul
Fuel Surcharge

4,950,160

0.44

Miscellaneous

450,120

0.04

$26,325,560

$2.34

Insurance

$675,120

$0.06

Fuel

8,775,190

0.78

Oil Lubricants

112,700

0.01

Tolls

112,550

0.01

Parts and Small Tools

787,630

0.07

Total Revenue

and some types of wood products. Loads transported on flatbed trailers also must be secured by straps or chains.
These types of loads often are associated with higher workers’ compensation claims. Thus, an extra strapping and chaining fee is charged only for a flatbed load.
Finally, additional insurance is required when

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