Question

g raj drives his own car on company business. his own company reimburses him at the rate of 42 cents per mile. raj estimates that his fixed costs per year such as taxes, insurance, and depreciation are $2025. the variable costs such as gas, oil, and maintenance are about 13.3 cents per mile. how many miles must raj drive to break even

Answer 1

He must drive 7,055.75 miles to break even.

Step-by-step explanation:

To calculate the number of miles to drive to break-even, we need to use the following break-even point formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 2,025 / (0.42 - 0.133)

Break-even point in units= 2,025 / 0.287

Break-even point in units= 7,055.75

He must drive 7,055.75 miles to break even.