Subtopic: Cost analysis of implements and tractors
Question Statement:
A farmer operates a combine harvester with fixed costs of Rs. $1,80,000$ per year and variable costs of Rs. $1,200$ per hectare. If custom harvesting charges earned by the combine are Rs. $3,000$ per hectare, calculate the break-even operating area in $\text{hectares per year}$.
Answer Key:
100
Step-by-Step Solution & Explanation
At break-even point, total revenue equals total cost:
$\text{Revenue} = \text{Custom rate} \times A = 3000 A$
$\text{Total Cost} = \text{Fixed Cost} + \text{Variable Cost} \times A = 180000 + 1200 A$
$3000 A - 1200 A = 180000$
$1800 A = 180000$
$A = 100\text{ ha/year}$