Question 978107: The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is
$65,000. The variable cost of recapping a tire is $7.5. The company charges$25 to recap a tire.
a. For an annual volume of 15, 000 tire, determine the total cost, total revenue, and profit.
b. Determine the annual break-even volume for the Retread Tire Company operation.
For A. My answer is 25.00 x 15,000 = 375,000 which is revenue
7.5 x 15,000 + 65,000= 177,500 which is Total cost
375,000 -177,500 = 197,500.00 for Profit
B. Break even point not sure how to calculate
Thank you
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! The total cost is $65,000 fixed + 15,000*$7.5=$65,000+$112,500=$177,500
Total revenue is 15000 tires * $25/tire=$375,000
Profit is Revenue-Cost=$375,000-$177,500=$197,500
Break even is:
$65,000+$7.5x=$25x, where x is the number of tires. It is the function for cost=function for profit.
$65,000=$17.5 x
x=3715 tires (3714 is close but a slight loss)
|
|
|
