Question

Simpson & Brown Company is a pile driving contractor they just received a large project installing steel pipe piles they do not want to down time for equipment repairs so the purchased a new Junttan PM 25H hydraulic pile diver for $575,000 a new John Deer 644K loader for $265,000, with trucks and other equipment another $110,000. The seven man crew, fuel, tools, & material, etc. cost $16.19 per lnft of pile installed. They charge $30.00 per lnft of pile installed. How many 60ft steel pipe piles do they have to install to break-even?

Answer 1

Break even point = ( fixed costs)/( sales per unit price - variable cost per unit)

Here, fixed cost = 575000+265000+110000

= $ 950,000.

Here to find out how many units of 60 feet steel pipes are installed. So, taking 60 feet is a unit.

So, variable cost per unit = 60*16.19 = $971.4

Sales cost per unit = 60*30 = $1800.

Therefore,

Break even point = (950,000)/(1800-971.4)

= 1146.51 units.

So, 114 6.5 1 units of 60 feet steel pipes are installed to get break even point.