Question

A company is planning to produce 24 electric cars per day. The setup cost of the plant is estimated as ₹ 19476 million and the variable cost is ₹ 0.6 million per car. The car will be sold at a price of ₹ 1.5 million. The number of days required for achieving the breakeven is \(\underline{\hspace{2cm}}\). [round off to nearest integer]

Hint:

Breakeven days = Fixed cost ÷ (Daily production × Contribution per unit).

Answer 1

Correct Answer: 900 - 905

Fixed (setup) cost: \[ F = 19476\ \text{million ₹} \] Variable cost per car: \[ C_v = 0.6\ \text{million ₹} \] Selling price per car: \[ P = 1.5\ \text{million ₹} \] Contribution margin per car: \[ P - C_v = 1.5 - 0.6 = 0.9\ \text{million ₹} \] Cars produced per day: \[ 24\ \text{cars/day} \] Daily contribution: \[ 0.9 \times 24 = 21.6\ \text{million ₹/day} \] Breakeven time (days): \[ \text{Days} = \frac{F}{\text{daily contribution}} = \frac{19476}{21.6} \approx 902.78\ \text{days} \] Thus, number of days required is in the range: \[ \boxed{900\text{ to }905} \]