Manual earth excavation costs Rs. 10/cum. A machine operates with a Rs. 4000 fixed cost and Rs. 2/cum variable cost. At what earth volume do machine and manual excavation costs break even_________________?
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Answer: A. 500 cum
Explanation
Equating manual cost to machine cost yields a break even volume of five hundred meters. Solving the linear equation ten V equals four thousand plus two V gives eight V. Dividing four thousand by eight results in exactly five hundred cubic meters volume. Break even analysis compares fixed and variable costs of alternative construction methods. Manual excavation involves purely variable labor costs without initial capital investments. Machine excavation involves fixed mobilization costs combined with lower variable operating costs.
Contractors use break even calculations to decide between manual labor and heavy machinery. High volume earthworks favor machinery because lower unit variable costs offset fixed expenses. Small volume jobs favor manual labor to avoid high mobilization and fixed equipment costs. Option B gives one thousand cubic meters, which favors machine excavation financially. Option C gives fifteen hundred cubic meters, well past the calculated break even point. Option D gives two thousand cubic meters, where machine excavation is vastly cheaper.
- Subject
- Engineering
- Category
- Civil Engineering
- Topic
- —
- Difficulty
- medium
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