An electronics firm is planning to manufacture a new handheld gaming device for the preteen market. The data have been estimated for the product. Assuming a negligible market (salvage) value for the equipment at the end of five years, determine the breakeven annual sales volume for this product.

An electronics firm is planning to manufacture a new handheld gaming device for the preteen market. The data have been estimated for the product. Assuming a negligible market (salvage) value for the equipment at the end of five years, determine the breakeven annual sales volume for this product.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An electronics firm is planning to manufacture a new handheld gaming device for the preteen market. The data have been estimated for the product. Assuming a
negligible market (salvage) value for the equipment at the end of five years, determine the breakeven annual sales volume for this product.

Sales price
$12.50 per unit
$200,000
Equipment cost
Overhead cost
$50,000 per year
Operating and maintenance cost $25 per operating hour
Production time per 1,000 units
100 hours
5 years
15% рer year
Study period (planning horizon)
MARR

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