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Unformatted text preview: num ber.) Break ev en point 8,800 miles Worksheet Problem 711 Learning Objective: 0702 Explain
how manufacturing processes are
organized. Problem 7-11
Aldo Redondo driv es his own c ar on c ompany bus ines s . His employ er reimburs es him for s uc h trav el at
the rate of 42 c ents per mile. Aldo es timates that his fix ed c os ts per y ear s uc h as tax es , ins uranc e, and
deprec iation are $2,200. The direc t or v ariable c os ts s uc h as gas , oil, and maintenanc e av erage about
17.0 c ents per mile.
How many miles mus t he driv e to break ev en? (Do not round interm ediate calculations. Roundup
your answer to the next whole num ber.) Break ev en point 8,800 ± 1 miles Explanation: The break ev en point is where total c os t equals total reimburs ement. Total c os ts inc lude the fix ed c os t
(FC) plus the v ariable c os t (VC) times the number of miles driv en (Q). Total reimburs ement equals the
per mile reimburs ement (R) times the number of miles driv en (Q). Solv e for the...
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This note was uploaded on 01/29/2014 for the course MAN 4504 taught by Professor Georgekyparisis during the Fall '09 term at FIU.
- Fall '09