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Introduction to Management Science: The Retread Tire Company and The Evergreen Fertilizer Company

1. The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is $60,000. The variable cost of recapping a tire is $9. The company charges $25 to recap a tire.

a. For an 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.

2. The Evergreen Fertilizer Company produces fertilizer. The company's fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for @0.40 per pound. Determine the monthly break-even volume for the company.

Solution Preview

1(a)
Total cost = Fixed cost + Total variable cost
Fixed cost = 60000
Total variable cost = ...

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