Question

Tema Oil Refinery ( TOR ) is the only company mandated to refine crude oil in Ghana. The company has estimated that the fixed cost would be $ 80000. Variable costs depends on the amount of crude oil refined but include the cost of labour and administrative expenses and it is estimated to be $ 30 per barrel of crude oil refined. The proposed price for a barrel of refined crude oil is $ 50. How many barrels of crude oil must be refined and sold to cover an extra cost of spare parts of $ 8000 ?