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?
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?
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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Question
10)
(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
depreciation expense of
$612,000
and it is expected to have a six-year life with annual $102,000
and no salvage value. Annual sales from the new facility are expected to be
2,010
units with a price of
$1,060
per unit. Variable production costs are
$630
per unit, and fixed cash expenses are
$76,000
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?
Question content area bottom
Part 1
a. The accounting break-even units of production is______units.
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