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The Regal Baking Company is considering the expansion of its
business into door-to-door delivery service. This would require an
additional $12,500 in labor costs per month. Company-owned vehicles
now used to make morning deliveries to restaurants could be used in
the afternoon to make the home deliveries. However, it is estimated
that an additional $5,000 would be required per month for gas, oil,
and maintenance. It is futher estimated that the home delivery use
of the trucks would be allocated 45% of the existing $6,500 fixed
vehicle costs. What is the differential delivery cost per month for
expanding into the home delivery market?
a. $12,500
b. $17,500
c. $19,750
d. $20,425

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