Purchase Solution

Fixed annual and variable costs

Not what you're looking for?

Ask Custom Question

Please help me solve this problem.

The Retread Tire Company recaps tires. The fixed annual cost of the recaping operation is $60,000. The variable cost of recapping a tire is $9. The company charges $25 to recap a tire.
a) For annual volume of 12,000 tires, determine the total cost, total revenue, and profit.
b) Determine the annual break-even volume for the retread Tire Company operation.
c) Grahically illustrate the break-even volume for the Retread Tire Company.

Purchase this Solution

Solution Summary

The solution finds the break-even point for the Retread Tire Company, where variable cost per unit is given, as well as volume. This answer bring forth a depiction of whether this company is effective in using its costs wisely to generate profits.

Solution Preview


a) The total cost is 60000 + 9X, where X is the number of tires recapped.
Thus, when X=12000, the total cost = 60000 + 9 (12000) = $168000
The total revenue is 25X
Thus, when X=12000, ...

Purchase this Solution

Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.