Answers(Need work shown using: Revenue and cost Function Approach to CVP analysis and Contribution Margin Approach to CVP analysis):

a) 12.719 tonnes/hectare

b) (i) Profit of $260/hectare

(ii) Loss of $310/hectare

c) 11.694 tonnes/hectare

A farmer is trying to decide whether to rent his neighbour's land to grow additional hay for sale to feedlots at S$180 per delivered tonne. The land can be rented at $400 per hectare for the season. Cultivation and planting will cost $600 per hectare; spraying and fertilizer will cost $450 per hectare. It will cost $42 per tonne to cut, condition, and bale the hay, and $24 per tonne to transport it to the feedlots. Answer a. How many tonnes per hectare must be produced to break even? b. What is the profit or loss at the $180 per tonne price if the crop yield is: (i) 15 tonnes per hectare? (ii) 10 tonnes per hectare? c. What is the new break-even tonnage if the selling price is increased to $190 per tonne