The product is sold at $3 per unit. Assume that the cost of a drilling machine (fixed cost) is $34,000 and the company produces 8,200 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $2 per unit, what would be the break-even number of units?
The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component consists of three parts (A, B, and C) that are purchased from outside and cost 35, 30, and 10 cents per piece, respectively. Parts A and B are assembled first on assembly line 1, which produces 185 components per hour. Part C undergoes a drilling operation before being finally assembled with the output from assembly line 1. There are, in total, six drilling machines, but at present only three of them are operational. Each drilling machine drills part C at a rate of 80 parts per hour. In the final assembly, the output from assembly line 1 is assembled with the drilled part C. The final assembly line produces at a rate of 205 components per hour. At present, components are produced eight hours a day and five days a week. Management believes that if the need arises, it can add a second shift of eight hours for the assembly lines. The cost of assembly labor is 30 cents per part for each assembly line; the cost of drilling labor is 10 cents per part. For drilling, the cost of electricity is 1 cent per part. The total overhead cost has been calculated as $1,200 per week. The
The product is sold at $3 per unit. Assume that the cost of a drilling machine (fixed cost) is $34,000 and the company produces 8,200 units per week. Assume that four drilling machines are used for production. If the company had an option to buy the same part at $2 per unit, what would be the break-even number of units?
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