Alcem Pte. Ltd. Is in the business of manufacturing cement. The company sets up a 1 million ton plant. The total cost of setting up the plant is $100 million. The cost of Raw material/ Labor etc for producing 1 ton of cement is $40. The price of Cement is $80 per ton. Assume a Capital Cost of 10% (which is also its opportunity cost) a) What is the breakeven quantity of cement for Alcem? 250,000 tons b) In the short run, below what price should Alcem shut down? $40 c) If Alcem produces and sells 1 million tonnes of Cement, what is the Economic Profit it is making? $30 million d) If there are no barriers to entry in this business what would you expect

Alcem Pte. Ltd. Is in the business of manufacturing cement. The company sets up a 1 million ton plant. The total cost of setting up the plant is $100 million. The cost of Raw material/ Labor etc for producing 1 ton of cement is $40. The price of Cement is $80 per ton. Assume a Capital Cost of 10% (which is also its opportunity cost) a) What is the breakeven quantity of cement for Alcem? 250,000 tons b) In the short run, below what price should Alcem shut down? $40 c) If Alcem produces and sells 1 million tonnes of Cement, what is the Economic Profit it is making? $30 million d) If there are no barriers to entry in this business what would you expect

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: A mill producing steel plate has fixed costs of $100,000 per week and variable costs of $0.15 per…

A: Variable costs vary based on the amount of output produced. Variable costs may include labor,…

Q: A company's unit costs based on 500,000 units are: Variable costs $32 Fixed costs 20 The normal unit…

A: In microeconomics theory, the opportunity cost of a particular activity is the value or benefit…

Q: Given EVM data, estimate the cost at completion of a project using the method "EAC based on combined…

A: Estimate at completion is the tool used by businesses to calculate the cost involved in the…

Q: James used $250,000 from his savings account that paid an annual interest of 15% to purchase a…

A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Q: 8.1 The fixed costs at Harley Motors are $1M annually. The main product has revenue of $9.90 per…

A: Breakeven Quantity=Fixed Cost/(Revenue per unit-Variable cost per unit)

Q: s AED 5300/- Direct labor cost per day is AED 8200.00 and factory over head is AED 4200.00 . If he…

A: Factory Costs are the expenses that are incurred by the business to manufacture goods that are…

Q: Using the Table below, what is the earliest completion time for this project? Activity Predecessor…

Q: 3. A firm uses labor and capital to produce an output. The hourly cost of labor is 10 and the hourly…

A: As per the guidelines, we are allowed to answer the first question only in case of multiple…

Q: A company produces two types of solar panels per year: x thousand of type A and y thousand of type…

A: Answer: Given, Revenue function: Rx,y=3x+4y Cost function: Cx,y=x2-2xy+6y2+5x-28y-9 Profit= Revenue…

Q: TransTech sells its product for $200. Marginal cost is a constant $160 per unit and fixed costs are…

A: Breakeven quantity is the total number of units that the business needs to sell to meet the costs…

Q: A vacuum cleaner retailer has been selling 84 units per month of the basic Bissell stick model for…

A: Breakeven sales are those quantity of sales which covers the total cost of production, it is the…

Q: For a vending machine project, the site cost=5,000 SR/month, material cost=0.5 SR/unit, and…

A: Unit Contribution: The profit earned from each unit sold after covering the variable costs.

Q: A certain task can be performed by the executive, working alone, in 4 hours. If he delegates the…

A: Costs can be categorized into fixed costs (remain constant regardless of production levels) and…

Q: Hilton Enterprises sells a product for $119 per unit. The variable cost is $68 per unit, while fixed…

A: Break-even analysis entails calculating and examining the margin of safety for an entity based on…

Question

2) Alcem Pte. Ltd. Is in the business of manufacturing cement. The company sets up a 1 million
ton plant. The total cost of setting up the plant is $100 million. The cost of Raw material/
Labor etc for producing 1 ton of cement is $ 40. The price of Cement is $80 per ton. Assume
a Capital Cost of 10% (which is also its opportunity cost)
a) What is the breakeven quantity of cement for Alcem?
250,000 tons
b)
In the short run, below what price should Alcem shut down?
$40
c) If Alcem produces and sells 1 million tonnes of Cement, what is the Economic
Profit it is making?
$30 million
d) If there are no barriers to entry in this business what would you expect

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Explanation:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

If a 5,000 gallon metal tank to hold hazardous materials cost $250,000. What would be the expected cost of constructing a 10,000 gallon tank for the same purpose given the power-sizing exponent of 0.5 Group of answer choices $375,000 $353,553 $477,561 .$500,000
1 Vehicle purchase. A student living in Lower Hutt is considering the purchase of a new vehicle. An electric vehicle (EV) can be purchased for $40,000 and has a running cost of $0.20 per km. Alternatively, a (petrol) combustion vehicle (CV) can purchased for $25,000 and has a running cost of $0.45 per km. The student is determined to make a decision which minimises the total cost depending on the number of kilometres that the vehicle will be used. (Here you should assume that the running costs also account for periodic costs such as mainte- nance, insurance, registration.) (a) Describe the decision and environment variables associated with this problem. (b) Determine the utility function R(D, X) which maps the outcomes to the total cost incurred. (c) Use a break-even analysis to determine the number of km for which the optimal decision differs above and below this amount. Specifically, plot R(D, X), determine where the break-even point occurs and mark it clearly on your plot, then…
I need help understanding how to solve this
Jenni has decided to start knitting during quarantine. She decides to open an etsy shop where she can sellknitted hats. Each hat costs $4.50 in materials to produce, in addition to the fee of $150 to license her shop.She plans on selling each hat for $24.50. (a) Write the cost, revenue, and profit equations for Jenni’s hat buisness. (b) Determine the profit if 13 hats are sold.(c) Determine thebreak-evenpoint.
Biwei decides to set up a small business in NYC. The start-up cost is $1000 for a license and the estimated direct cost is $4 per output. After one year, Biwei’s business becomes profitable. Sonia plans to enter the same business in thesame area. What would be the cost facing Sonia? Does she bear the same cost as Biwei?
If engineering change order is the activity for an application of the ABC method of overhead allocation, the most reasonable cost driver(s) may be:1 – number of changes processed2 – size of the work force3 – management cost to process the change ordera. 1b. 2c. 3d. 1 and 3