Question
a company assembles up to 30 tractors per month to be used in the agriculture sector. Production has dropped to 25 units per month over
a company assembles up to 30 tractors per month to be used in the agriculture sector. Production has dropped to 25 units per month over the last 5 months due to more competitors entering the market. The following information is available.
Fixed costs RM750,000 per month
Variable cost per unit RM35,000
Selling price per unit RM75,000
a) How does the reduced production level of 25 units per month compare with the current breakeven point? Plot the breakeven graph, showing all the necessary elements
.b) What is the current profit level per month?
c) If the production level drops further to 15 units per month, what would be the selling price per tractor to break even if the fixed and variable costs remain unchanged?
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