A manufacturing company is evaluating an investment plan to produce a new product based on the following estimated data: • Equipment Cost: $150,000 • Overhead Cost: $30,000/year • Sales price: $12/unit • Operation cost: $20/operating hour • Production time: 0.1 hour/unit • Planning horizon: 4 years • MARR: 15% • Salvage value after 4 years: 0 By using break-even analysis, the break-even sales value for the product should be:
A manufacturing company is evaluating an investment plan to produce a new product based on the following estimated data: • Equipment Cost: $150,000 • Overhead Cost: $30,000/year • Sales price: $12/unit • Operation cost: $20/operating hour • Production time: 0.1 hour/unit • Planning horizon: 4 years • MARR: 15% • Salvage value after 4 years: 0 By using break-even analysis, the break-even sales value for the product should be:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A manufacturing company is evaluating an investment plan to produce a new product based on the following
estimated data:
• Equipment Cost: $150,000
• Overhead Cost: $30,000/year
• Sales price: $12/unit
Operation cost: $20/operating hour
• Production time: O.1 hour/unit
• Planning horizon: 4 years
• MARR: 15%
Salvage value after 4 years: 0
By using break-even analysis, the break-even sales value for the product should be:
Select one:
a. 6755 units X
b. 8255 units
C. 9755 units
d. 11,255 units
The correct answer is: 8255 units](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F14f77023-d7b3-4cc8-bebe-4108c30aae53%2Fed81a8c7-ed01-4f6e-b4f9-0f19a73353f0%2F1gcdsmh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A manufacturing company is evaluating an investment plan to produce a new product based on the following
estimated data:
• Equipment Cost: $150,000
• Overhead Cost: $30,000/year
• Sales price: $12/unit
Operation cost: $20/operating hour
• Production time: O.1 hour/unit
• Planning horizon: 4 years
• MARR: 15%
Salvage value after 4 years: 0
By using break-even analysis, the break-even sales value for the product should be:
Select one:
a. 6755 units X
b. 8255 units
C. 9755 units
d. 11,255 units
The correct answer is: 8255 units
Expert Solution
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Step 1
Here we calculate the break-even sales value of product by using the break even analysis and choose the correct option so the calculation of the following by using the given information which are as follow-
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