Bus 308

Dan’s Delivery Drivers

BUS 308

, C.P.A

October 29, 2012

Dan’s Delivery Drivers

Dan’s Delivery Drivers, Inc. is a small company based out of Modesto, California that specializes in delivering important documents requiring signatures from business to business in and around Modesto, California. In anticipation of possible expansion, gas prices were assessed to assure that they charged accordingly for farther deliveries. Accounting for the median gas prices and the trend of prices moving forward Dan’s Delivery Drivers, Inc. will be able to accurately set its prices based on current trends. Based on observed frequencies of events, Dan’s should be able to plan properly for the future based on relative frequency. Planning appropriately, Dan’s is going to be able to price accurately and grow.

To be able to keep up with the rising prices, a company must take into account one of the biggest variables, gasoline. One of the best ways to figure out where one is going is to find out where one has been. As can be seen on the excel spreadsheet, between 1982 and 2011 gas prices have increased substantially. In 1982, the median gas price was $1.296 per gallon. 29 years later, in 2011 the median gas price was $3.129 per gallon. That is an increase of $1.833 or 141.435 %. While a $1.833 may not sound like much over the course of 29 years, take into account that from 2000 to 2011 the average price of gas doubled from $1.510 to $3.129. Not planning properly for increases can be detrimental to a company that is planning on expansion of any sort and deals with an important variable cost such as gasoline.

In California, the average gas prices are currently about $4.130, while the national average is about $3.54 (based on information retrieved from Gas Buddy.com). Based on the linear regression line, the median gas prices should be approximately $3.15 per gallon in the year 2020. Based on the increases that have been seen from 2000 to 2011 one could expect the gas...