1.A manager has determined that a potential new product can be sold at a price of 10.00 each. The cost to produce the product is 5.00, but the equipment necessary for production must be leased for 25,000 per year. What is the break-even point? 2.In order to produce a new product, a firm must lease equipment at a cost of 100,000 per year. The managers feel that they can sell 50,000 units per year at a price of 75. What is the highest variable cost that will allow the firm to at least break even on this project? Variable Cost
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- Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?In order to produce a new product, a firm must lease equipment at a cost of $185,000 per year. The managers feel that they can sell 67,000 units per year at a price of $92. What is the highest variable cost that will allow the firm to at least break even on this project? (Round your answer to 2 decimal places.)
- 1. A manager has determined that a potential new product can be sold at a price of $25 each. The cost to produce the product is $17.5, but the equipment necessary for production must be leased for $75,000 per year. What is the break-even point? 2. In order to produce a new product, a firm must lease equipment at a cost of $175,000 per year. The managers feel that they can sell 65,000 units per year at a price of $90. What is the highest variable cost that will allow the firm to at least break even on this project? (Round your answer to 2 decimal places.)A manager has determined that a potential new product can be sold at a price of $50 each. The cost to produce the product is $35, but the equipment necessary for production must be leased for $100,000 per year. What is the break-even point? (Round your answer to the nearest whole number.)Kabalikat Company has the opportunity to introduce a new product. Kabalikat expects the product to sell for P75 with variable cost per unit of P50. The annual fixed costs, excluding the amount of depreciation is P4,500,000. The company expects to sell 300,000 units. To produce the new product line, the company needs to purchase a new machine that costs P6,000,000. The new machine is expected to last for four years with a very negligible salvage value. The company has a policy of depreciating its machine for both book and tax purposes for four years. The company has a marginal cost of capital of 13.75 percent and is subject to tax rate of 40 percent. The machine’s net present value is: Group of answer choices P928,500 P2,786,100 P150,270 P1,028,900 PreviousNext
- . 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.Acme Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. If Acme Products requires a 75% return on sales to undertake production, what is the target cost for the new widget? Select one: O a. $31.50. O b. $67.50. OC. $58.50. Od. $22.50.A sales engineer claims that his pump is economically justifiable. He says that for a cost of P250,000.00, it will havea market value of P30,000 at the end of 10 years. If the increased productivity attributable to this project would beP38,804 per year, is he lying? Take MARR = 10%
- Consider the following: A factory can produce 150,000 units of a good/year at a cost of $100/unit may produce the good for 2 years Retail price is initially $500/unit, but will either increase or decrease by $100 during year 1, and then subsequently increase or decrease by $200 during year 2. Each year, the increase or decrease is equally likely Fixed costs of running the factory are $50M per year if the factory is implemented (not including rent) Rent is $10M, whether or not the factory is set-up We will assume risk neutrality and a 10% cost of capital For simplicity, we will assume that there is no initial (year 0) cashflow associated with the factory The production technology of the factory allows for flexible starting (but not stopping). This means that in year 1, the factory may be operated or not. If the factory is operational in year 1, it will also be operational in year 2. If the factory is not operational in year 1, then it may either be operated or not in year 2. What is…An engineer of a manufacturing company has determined the costs of producing a new product to be as follows: Equipment cost: $300,000/year Variable cost per unit of production: $15.00 Overhead cost: $50,000/year The company is planning to run this project for 5 years and estimated that the product can be sold for a unit price of $40. How many units must be produced and sold each year to break even? [Hints: no interest is given, so no consideration of time value of money. Use the knowledge you learnt in chapter 2]Straight-Line is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1,200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are shown below. What will be the impact on the break-even point if Straight-Line purchases the new computer? What will be the impact on net operating income if Straight-Line purchases the new computer? What would be your recommendation to Staight-Line regarding this purchase? Units sold 1400 Sales price per unit $ 225 Variable cost per unit $ 145 Fixed costs $ 52,000 Break-even in units 650 Contribution margin ratio 0.36 Break-even in dollars $ 146,250 Sales $ 315,000 Variable costs $ 203,000 Fixed costs $…