Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of the number of diamonds sold? Note: Do not round intermediate calculations. b. What is the NPV break-even level of sales assuming a tax rate of 21%, a 10-year project life, and a discount rate of 12%? Note: Do not round intermediate calculations. Round your answer up to the nearest whole unit. X Answer is complete but not entirely correct. diamonds per year 5,000 7,332 diamonds per year a. Break-even sales b. Break-even sales
Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of the number of diamonds sold? Note: Do not round intermediate calculations. b. What is the NPV break-even level of sales assuming a tax rate of 21%, a 10-year project life, and a discount rate of 12%? Note: Do not round intermediate calculations. Round your answer up to the nearest whole unit. X Answer is complete but not entirely correct. diamonds per year 5,000 7,332 diamonds per year a. Break-even sales b. Break-even sales
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a
standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The
machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of the number of diamonds sold?
Note: Do not round intermediate calculations.
b. What is the NPV break-even level of sales assuming a tax rate of 21%, a 10-year project life, and a discount rate of 12%?
Note: Do not round intermediate calculations. Round your answer up to the nearest whole unit.
> Answer is complete but not entirely correct.
diamonds per year
5,000
7,332
diamonds per year
a. Break-even sales
b. Break-even sales](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd6041838-10a1-4385-bb94-8421dbb43695%2F2847630b-08b0-4426-a59e-8399b07d9f6c%2F4ywgjit_processed.png&w=3840&q=75)
Transcribed Image Text:Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a
standard diamond is $40. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The
machinery costs $1 million and is depreciated straight-line over 10 years to a salvage value of zero.
a. What is the accounting break-even level of sales in terms of the number of diamonds sold?
Note: Do not round intermediate calculations.
b. What is the NPV break-even level of sales assuming a tax rate of 21%, a 10-year project life, and a discount rate of 12%?
Note: Do not round intermediate calculations. Round your answer up to the nearest whole unit.
> Answer is complete but not entirely correct.
diamonds per year
5,000
7,332
diamonds per year
a. Break-even sales
b. Break-even sales
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