Myers Corporation is attempting to develop and market a new garden tractor.  Fixed cost  to develop and produce the new tractor are estimated to $10,000,000 per year.  The variable cost to make each tractor has been estimated at $2000.  The marketing department has recommended a price of $4000 per tractor.             What is the breakeven level of output for the new tractor.   2. What if management expects to generate a target profit (EBIT) of $2,000,000, how many tractors must be sold.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.