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Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per unit, and fixed costs are $300,000 per year. Quantity sold is expected to be 15,000 units per year. The new product will require an initial investment of $16 million, depreciation will be straight-line to zero for eight years, and salvage at the end of eight years is expected to be $2 million. Demand for the product is expected to be stable and to continue for eight years. The required rate of return on this new product line is 12%. Ignoring taxes, what is the accounting break-even quantity? Select one: a. 667 b. 6,776 c. 7,667 d. 7,767 e. 77,667

Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per unit, and fixed costs are $300,000 per year. Quantity sold is expected to be 15,000 units per year. The new product will require an initial investment of $16 million, depreciation will be straight-line to zero for eight years, and salvage at the end of eight years is expected to be $2 million. Demand for the product is expected to be stable and to continue for eight years. The required rate of return on this new product line is 12%. Ignoring taxes, what is the accounting break-even quantity? Select one: a. 667 b. 6,776 c. 7,667 d. 7,767 e. 77,667

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per unit, and fixed costs are $300,000 per year. Quantity sold is expected to be 15,000 units per year. The new product will require an initial investment of $16 million, depreciation will be straight-line to zero for eight years, and salvage at the end of eight years is expected to be $2 million. Demand for the product is expected to be stable and to continue for eight years. The required rate of return on this new product line is 12%. Ignoring taxes, what is the accounting break-even quantity?

Select one:
a. 667
b. 6,776
c. 7,667
d. 7,767
e. 77,667
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