Answer to Question #97906 in Engineering for MAHATHIR

Question #97906
A plant operation has fixed costs of RM 2,000,000 per year, and its output capacity is
100,000 electrical appliances per year. The variable cost is RM 40 per unit.
(a) Based on the information given, how many electrical appliances must be sold before
the plant starting to make a profit if the product sells for RM 90 per unit. Use
breakeven point analysis.
(b) Identify TWO (2) types of fixed costs that the plant should carefully examine to
lower its breakeven point. Explain your reasoning.
(c) Differentiate between direct and indirect costs and give ONE (1) example of indirect
Expert's answer
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