Answer:
See below
Step-by-step explanation:
A.
• Total cost
The total cost for recapping the tires is the addition of fixed cost and the variable cost
= ($60,000 fixed) + (12,000 × $9)
= $60,000 + $108,000
= $168,000
• Total revenue
Revenue from 1 tire = $25
Total tires recapped = 12,000
Therefore, total revenue
= 12,000 × $25
= $300,000
• Total profit
Total profit = Total revenue - Cost
Given that;
Total revenue = $300,000
Total cost = $168,000
Total profit = $300,000 - $168,000
Total profit = $132,000
B.
• Break even point.
This is the point, where the revenue and the cost incurred by the company equals. We can make the break even point occur at y-tires.
Cost of recapping y tires = Revenue from y tires
60,000 + 9y = $25
60,000 = 25y - 9y
60,000 = 16y
y = 3,750 litres
It means that on recapping 3,750 tires, the cost will be equal to the revenue generating 0 profit , which is the break even point.