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mooth Rollers produces high quality rubber tires for motorcycles. Please calculate the breakeven point, for: a) if the company sold all its tires individually; and
mooth Rollers
produces high quality rubber tires for motorcycles.
Please calculate the
breakeven point, for: a) if the company sold all its tires individually; and b) in pairs
.
(10
marks)
Details:
Retail Price =
$225/tire
OR
$420/2 tires
Fixed Costs (FC)
= $55,000 (rent) + $5,000 (utilities) + $10,000 (depreciation)
=
$70,000
Unit Variable Costs (UVC)
= $40/unit + (6 hours/unit $25/hour)
= $40 (materials) + $150 (labour)
= $190/unit
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