25: A manufacturing company plans to renew production machinery to save on Q5: manufacturing costs. The unit selling price is 9 TL/ton, and the contribution margin is 3 TL/ton. The monthly total fixed cost, not including depreciation, is 6.000 TL. The company expects to save on variable costs by renewing the machine. The cost of the new machine is 90.000 TL, and the economic life is five years. The expected unit variable cost is 5 TL/ton. The company computes the depreciation cost based on the Straight Line Method. The minimum expected return of the investment is 2%. a) Compute the monthly breakeven point for the new machine b) The expected annual demand for production is 35.000 tons for the following five years. Should the company invest and why?

25: A manufacturing company plans to renew production machinery to save on Q5: manufacturing costs. The unit selling price is 9 TL/ton, and the contribution margin is 3 TL/ton. The monthly total fixed cost, not including depreciation, is 6.000 TL. The company expects to save on variable costs by renewing the machine. The cost of the new machine is 90.000 TL, and the economic life is five years. The expected unit variable cost is 5 TL/ton. The company computes the depreciation cost based on the Straight Line Method. The minimum expected return of the investment is 2%. a) Compute the monthly breakeven point for the new machine b) The expected annual demand for production is 35.000 tons for the following five years. Should the company invest and why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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