2-7 Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: Equipment cost: $288,000/year Equipment salvage value at EOY5= $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning hori- zon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even? Contributed by Paul R. McCright, University of South Florida

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2-7
Heinrich is a manufacturing engineer with the Miller
Company. He has determined the costs of producing
a new product to be as follows:
Equipment cost: $288,000/year
Equipment salvage value at EOY5 = $41,000
Variable cost per unit of production: $14.55
Overhead cost per year: $48,300
If the Miller Company uses a 5-year planning hori-
zon and the product can be sold for a unit price of
$39.75, how many units must be produced and sold
each year to break even? Contributed by Paul R.
McCright, University of South Florida
Transcribed Image Text:2-7 Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: Equipment cost: $288,000/year Equipment salvage value at EOY5 = $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning hori- zon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even? Contributed by Paul R. McCright, University of South Florida
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