Roads Infrastructure has a budget of R$45000000$ for staff costs of employment and R$20000000$ for operating expenses during the financial year. Their share in overhead allocation amounts to R$10000000.$ These are all fixed costs $($FC$).$

In addition, they spend in average R$25000$ per $km$ of road constructed on travelling and other expenses such as legal and consultant fees, and the construction cost per km amounts to R$95000.$ Th'ese are variable costs $($UVC$).$

Immediate acquisition of urgently required new equipment will be required at a cost of R$15750000.$ The book value of the equipment will be R$200000$ at the end of the five$-$year period.

The tax rate is $27\%,$ and the required rate of return is $8\%.$

a$.$ How many km$\text{'}$s of road should be constructed per year for Roads Infrastructure to justify its existence financially if the total allocation for road construction amounts to R$130000$ per $km($USP$)?$ Make use of cash, accounting and financial break$-$even calculations.

b$.$ What is the degree of operating leverage at $10000kms,$ and what would the effect be on the OCF if an additional $1000kms$ are then constructed?