Grim Tyres Pvt. Ltd is a company in the business of making rims for a variety...

  

Transcribed Image Text:

Grim Tyres Pvt. Ltd is a company in the business of making rims for a variety of tyre sizes. They are thinking about introducing a new alloy rim for one of the tyre sizes that they manufacture, which would require an additional fixed cost of $20,000 per year. The variable costs for the new rim have been estimated to be $5 per rim. i. If they sell the new rim for $15, how many must be sold to for the company to break even? ii. If they sell 3,000 new rim at the $15 price, what will the contribution to profit be? Grim Tyres Pvt. Ltd is a company in the business of making rims for a variety of tyre sizes. They are thinking about introducing a new alloy rim for one of the tyre sizes that they manufacture, which would require an additional fixed cost of $20,000 per year. The variable costs for the new rim have been estimated to be $5 per rim. i. If they sell the new rim for $15, how many must be sold to for the company to break even? ii. If they sell 3,000 new rim at the $15 price, what will the contribution to profit be?

Answer rating: 100% (QA)

i To break even the total revenues should be equal to total costs Total Fixed Cos... View the full answer