(Related to Checkpoint 13.4) (Break-even analysis) The Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $600,000 and it is expected tohave a six-year life with annual depreciation expense of $100,000 and no salvage value. Annual sales from the new facility are expected to be 2,040 units with a price of $950 per unit. Variable production costs are $600per unit, and fixed cash expenses are $85,000 per year.a. Find the accounting and the cash break-even units of production.b. Will the plant make a profit based on its current expected level of operations?c. Will the plant contribute cash flow to the firm at the expected level of operations?a. The accounting break-even units of production is 242.9 units. (Round to the nearest whole number.)GEILE

a. accounting break-even units = (Fixed cost + Depreciation)/selling price per unit - variable cost…

Answered: a. Find the accounting and the cash…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Calculating LIFO, FIFO, Income and Cash Flows An acquaintance has proposed the following business plan to you. A local company requires a consistent quantity of a commodity and is looking for a reliable supplier. You could become that reliable supplier. The cost of the commodity is expected to rise steadily over the foreseeable future, but the company is willing to pay more than the price that is current at the time. All you would need to do is make an investment, purchase the inventory and then deliver inventory to the company over the following year. One complication is that the commodity is available for purchase only seasonally, so at the end of every year you would need to purchase the supply for the following year. The customer pays promptly on delivery. An initial cash investment of $62,000 would be used to purchase $50,000 of inventory in December 2019. The remaining cash would be held for liquidity needs. In the following year, you would deliver this inventory to the customer.…

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a. Find the accounting and the cash break-even units of production. b. Will the plant make a profit based on its current expected level of operations? c. Will the plant contribute cash flow to the firm at the expected level of operations?