Discussion
Fixed costs are \( 8.0 \) million a year, the selling price is \( 4200 \) per tonne and the variable cost is \( 2900 \) per tonne. The breakeven output is
Answer: B
Correct answer: 6154 tonnes
The contribution per tonne is \(4200 - 2900 = 1300\):
\[ Q_{BE} = \frac{8{,}000{,}000}{1300} = 6154\ \text{tonnes} \]Below this output the fixed costs are not covered; above it, every tonne adds 1300 to profit.
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