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