Problem
Sala pipe fittings produce pipe elbows and reducers from stainless steel. The company can process up to 16391 tonnes of stainless steel sheets in a year. The company pays the steel company $753 per tonne of stainless steel sheets and each tonne is used to manufacture $2933 worth of elbows and reducers. Variable processing costs are $377 per tonne and fixed processing costs $4.9 million per year at all production levels. Administrative overhead is $2 million per year regardless of the volume of the production. Marketing and transportation costs work out to be $319 per tonne. Determine the break-even volume in terms of percent capacity utilization.