If a Medium tractor cost $100million to launch and the variable cost of producing one additional Medium tractor is $29,000. If we make the assumption that John Deere must be  paid back during the first year of launch.

How many medium tractors would they have needed to sell to breakeven? How does it look?

 

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Quarter* Sales (units): Large Small Tractor Tracotr 1 54,522 2 55,024 3 55,526 4 56,028 5 54.074 6 52,172 7 50,209 8 48,213 9 46.269 10 44,096 11 42,141 12 40,155 15,222 15.526 15,830 16.134 16.051 Average Selling Price: Small Medium Large Medium Tractor Tractor Tractor Tractor 0 0 0 0 $37,000 $37,000 $37,000 $37,000 $40,000 $27,000 N/A $27,000 N/A $27,000 N/A $27,000 N/A 7,750 $30,000 7,822 $40,000 $30,000 8,999 $40,000 $30,000 9,911 $40,000 $30,000 10,004 $41.000 12,863 $41,000 11,342 $41,000 $31,000 $31,000 15,963 15,817 15,626 15.430 15,091 14,827 14.520 12,238 $41.000 $31,000 $31,000 $33,000 $33,000 $33,000 $33,000 $37,000 $37,000 $37,000 $37,000 Quarter* Sales (units): Large Small Tractor Tracotr 1 54,522 2 55,024 3 55,526 4 56,028 5 54.074 6 52,172 7 50,209 8 48,213 9 46.269 10 44,096 11 42,141 12 40,155 15,222 15.526 15,830 16.134 16.051 Average Selling Price: Small Medium Large Medium Tractor Tractor Tractor Tractor 0 0 0 0 $37,000 $37,000 $37,000 $37,000 $40,000 $27,000 N/A $27,000 N/A $27,000 N/A $27,000 N/A 7,750 $30,000 7,822 $40,000 $30,000 8,999 $40,000 $30,000 9,911 $40,000 $30,000 10,004 $41.000 12,863 $41,000 11,342 $41,000 $31,000 $31,000 15,963 15,817 15,626 15.430 15,091 14,827 14.520 12,238 $41.000 $31,000 $31,000 $33,000 $33,000 $33,000 $33,000 $37,000 $37,000 $37,000 $37,000

Answer rating: 100% (QA)

The breakeven point for the medium tractor is calculated as follows Breakeven point Fixed costs Sale... View the full answer