1. Calculating Costs and Break-Even [LO3] Night| Shades, Inc. (NSI), manufactures biotech sunglasses. The variable materials cost is $11.13 per unit, and the variable labor cost is $7.29 per unit. a. What is the variable cost per unit? b. Suppose the company incurs fixed costs of $875,000 during a year in which total production is 190,000 units. What are the total costs for the year? c. If the selling price is $44.99 per unit, does the company break even on a cash basis? If depreciation is $435,000 per year, what is the accounting break-even point?

1. Calculating Costs and Break-Even [LO3] Night| Shades, Inc. (NSI), manufactures biotech sunglasses. The variable materials cost is $11.13 per unit, and the variable labor cost is $7.29 per unit. a. What is the variable cost per unit? b. Suppose the company incurs fixed costs of $875,000 during a year in which total production is 190,000 units. What are the total costs for the year? c. If the selling price is $44.99 per unit, does the company break even on a cash basis? If depreciation is $435,000 per year, what is the accounting break-even point?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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Question

1. Calculating Costs and Break-Even [LO3] Night
Shades, Inc. (NSI), manufactures biotech sunglasses. The
variable materials cost is $11.13 per unit, and the variable
labor cost is $7.29 per unit.
a. What is the variable cost per unit?
b. Suppose the company incurs fixed costs of $875,000
during a year in which total production is 190,000 units.
What are the total costs for the year?
c. If the selling price is $44.99 per unit, does the company
break even on a cash basis? If depreciation is $435,000 per
year, what is the accounting break-even point?

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