Tyres For Life (TFL) has been manufacturing car tyres for the domestic Australian market for over...

 

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Tyres For Life (TFL) has been manufacturing car tyres for the domestic Australian market for over 20 years. They pride themselves in producing locally but are still competitive compared to imports from countries that rely on cheap labour. A key to their success has been keeping at pace with technological change that has reduced the labour time spent per tyre significantly along with eliminating wastage of materials. Lockdowns throughout the country have had a significant impact on car tyre demand as people are restricted from leaving their homes and using cars is permitted only in very limited circumstances. In light of these recent developments, TFL is now considering whether it should start a new line of business that makes high-performance bicycle tyres. The estimated cost of this new business are as follows: Fixed costs are $12,000,000. The directors have therefore asked you to identify how many tyres will need to be produced and sold to break even (make zero profit) for the financial year ending 2022. Selling Price ($) Racing Tyre 120 Variable Costs ($) 25 Expected Sales Units 150,000 160,000 Racing Tyres 200,000 Urban Tyres Urban Tyre 75 12 250,000 60,000 Racing Tyres and 100,000 Urban Tyres 75,000 Racing Tyres and 125,000 Urban Tyres 150,000 Racing Tyres and 250,000 Urban Tyres Tyres For Life (TFL) has been manufacturing car tyres for the domestic Australian market for over 20 years. They pride themselves in producing locally but are still competitive compared to imports from countries that rely on cheap labour. A key to their success has been keeping at pace with technological change that has reduced the labour time spent per tyre significantly along with eliminating wastage of materials. Lockdowns throughout the country have had a significant impact on car tyre demand as people are restricted from leaving their homes and using cars is permitted only in very limited circumstances. In light of these recent developments, TFL is now considering whether it should start a new line of business that makes high-performance bicycle tyres. The estimated cost of this new business are as follows: Fixed costs are $12,000,000. The directors have therefore asked you to identify how many tyres will need to be produced and sold to break even (make zero profit) for the financial year ending 2022. Selling Price ($) Racing Tyre 120 Variable Costs ($) 25 Expected Sales Units 150,000 160,000 Racing Tyres 200,000 Urban Tyres Urban Tyre 75 12 250,000 60,000 Racing Tyres and 100,000 Urban Tyres 75,000 Racing Tyres and 125,000 Urban Tyres 150,000 Racing Tyres and 250,000 Urban Tyres

Answer rating: 100% (QA)

456780 9 10 11 23 NEOFON 12 13 14 15 16 17 18 19 20 21 22 23 24 B Selling price Less Variable ... View the full answer