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(Solution Library) Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are $1,000,000. Selling price per barrel of oil is

Question: Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are $1,000,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10.

  1. Determine the breakeven output (in dollars).
  2. Determine the number of barrels of oil that offshore most produce and sell in order to earn a target (operating) profit of $1,500,000.

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