(Related to Checkpoint 13.4) (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 $594,000.and it is expected to have a six-year life with annual depreciation expense of $99,000 and no salvage value. Annual sales from the new facility are expected to be 2,030 units with a price of $1,040 per unit. Variable production costs are $550 per unit, and fixed cash expenses are $83,000 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?
(Related to Checkpoint 13.4) (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 $594,000.and it is expected to have a six-year life with annual depreciation expense of $99,000 and no salvage value. Annual sales from the new facility are expected to be 2,030 units with a price of $1,040 per unit. Variable production costs are $550 per unit, and fixed cash expenses are $83,000 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?
Chapter1: Financial Statements And Business Decisions
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(Related to Checkpoint 13.4) (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 $594,000.and it is expected to have a six-year life with annual depreciation expense of $99,000 and no salvage value. Annual sales from the new
facility are expected to be 2,030 units with a price of $1,040 per unit. Variable production costs are $550 per unit, and fixed cash expenses are $83,000 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?
a. The accounting break-even units of production is units (Round to the nearest whole numher)
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