Mrs. XYZ cultivates sorghum and wheat on a farm with an area of 570 hectares that is suitable for cultivation. Her expected yield is 3.3 tons per hectare for sorghum and 2.3 tons per hectare for wheat. The expected prices are R 3 450 per ton for sorghum and R 2 800 per ton for wheat. Fixed costs are R 325 000. He estimates input costs of R 2 750 per ton for sorghum and R 3 050 per ton for wheat. Consider the information for Mr XYZ’s farm to determine the minimum cultivated area he needs for his gross income to break even with his total cost.

Mrs. XYZ cultivates sorghum and wheat on a farm with an area of 570 hectares that is suitable for cultivation. Her expected yield is 3.3 tons per hectare for sorghum and 2.3 tons per hectare for wheat. The expected prices are R 3 450 per ton for sorghum and R 2 800 per ton for wheat. Fixed costs are R 325 000. He estimates input costs of R 2 750 per ton for sorghum and R 3 050 per ton for wheat. Consider the information for Mr XYZ’s farm to determine the minimum cultivated area he needs for his gross income to break even with his total cost.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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