Question

The cement manufacturing company supplies 5000 tons cement per day and it has sold $150 per ton. The company has a unit variable cost of $80 per ton of cement and it use 5% commission. Besides to this the company has S12,000 fixed cost per month. Therefore, formulate the total cost of the company and its break-even revenue?

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Answer 1

Step-by-step explanation:To calculate the total cost of the cement manufacturing company, you need to consider the unit variable cost, the commission, and the fixed costs.

First, calculate the total variable cost per day by multiplying the unit variable cost by the number of tons of cement produced per day: $80/ton * 5000 tons/day = $400,000/day

Then, calculate the total commission cost by multiplying the total variable cost by the commission rate: $400,000/day * 5% = $20,000/day

Next, calculate the total fixed cost per day by dividing the monthly fixed cost by the number of days in a month: $12,000/month / 30 days/month = $400/day

Finally, add the total variable cost, the total commission cost, and the total fixed cost to calculate the total cost per day: $400,000/day + $20,000/day + $400/day = $420,400/day

To calculate the break-even revenue, divide the total cost by the difference between the sales price and the unit variable cost, then multiply by the number of tons of cement sold per day: ($420,400/day) / ($150/ton - $80/ton) * 5000 tons/day = $600,000/day

This means that the cement manufacturing company needs to generate at least $600,000 in revenue per day in order to break even.

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