Jupiter Game Company manufactures pocket electronic games.  Last year Jupiter sold 25,000 games at $25 each.  Total costs amounted to $525,000, of which $150,000 were considered fixed costs. In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year.  A new machine also would be needed to increase plant capacity.  The machine would cost $18,000 with a useful life of six years and no salvage value.  The company uses straight-line depreciation on all plant assets.  (Ignore income taxes). 1) What was Jupiter's break-even point in number of units last year?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Jupiter Game Company manufactures pocket electronic games.  Last year Jupiter sold 25,000 games at $25 each.  Total costs amounted to $525,000, of which $150,000 were considered fixed costs.

In an attempt to improve its product, the company is considering replacing a component part that has a cost of $2.50 with a new and better part costing $4.50 per unit in the coming year.  A new machine also would be needed to increase plant capacity.  The machine would cost $18,000 with a useful life of six years and no salvage value.  The company uses straight-line depreciation on all plant assets.  (Ignore income taxes).

1) What was Jupiter's break-even point in number of units last year?

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