Your uncle is considering investing in a new company that will produce high quality stereo speakers.The sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit isestimated to be $75.00; and fixed costs are estimated at $1,200,000. What sales volume would berequired to break even, i.e., to have EBIT = zero?O 28,880O 16,000O none of the aboveO 30,400Ⓒ33,600

Breakeven is the point at which an entity is in a situation of no profit and no loss. At this point,…

Answered: Your uncle is considering investing in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

You want to start a firm whose output you believe you can sell for $25 per unit. The operation will require fixed costs of $130,000, and the variable costs are expected to be $16 a unit. a.) What will be the break-even level of output? b.) If fixed costs reduce to $100,000 and the variable costs reduced to $15, what is the new break-even level of output?
You are preparing to produce some goods for sale. You will sell them in one year and you will incur costs of $70,000 immediately. If your cost of capital is 6.9%, what is the minimumdollar amount you need to sell the goods for in order for this to be a non-negative NPV?The minimum dollar amount is $(Round to the nearest dollar.)
LEGO is producing a new brick set and plan on selling it for $120. The fixed costs are $500,000 and variable costs are $80. This results in a break even point of 12500 sets. The mean number of sets sold is anticipated to be 15000 and the standard deviation of the distribution is 5000. They also believe the loss per unit when sales are below the break even is $50. Determine the following given the above scenario. Expected Monetary Value: $ 300000 D value for unit normal loss table: 0.810 N value from unit normal loss table: 0.118 Expected Opportunity Loss: $ 54638.05
2. Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWS in each market is given by: QE = 4,000,000 – 100 PE and Qu = 1,000,000 – 20PU where the subscript E denotes Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a. What quantity of BMWS should the firm sell in each market, and what should the price be in each market? What should the total profit be? b. If BMW were forced to charge the same price in each market, what would be the quantity sold in each market, the equilibrium price, and the company's profit? c. If BMW can charge each customer his reservation price, what would be the quantity sold in each market, and the company's profit?
A4
Suppose that BMW can produce any quantity of cars at a constant marginal cost equal in the United States. The demand for BMWS in each market is given by $20,000 and a fixed cost of $10 billion. You are asked advise the CEO as to what prices and quantities BMW should set for sales in Europe and QE = 5,000,000 - 100PE and Qu = 1,500,000 - 20PU where the subscript E denotes Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a. What quantity of BMWS should the firm sell in each market, and what should the price be in each market? What should the total profit be? (round dollar amounts to the nearest penny and quantities to the nearest integer) In Europe, the equilibrium quantity is 1500000 cars at an equilibrium price of $ 35000. While in the United States, the equilibrium quantity is 550000 cars at an equilibrium price of $ 47500 BMW makes a total profit of $ 27,625,000,000 b. If BMW were forced to charge the same…
Cooper Industries wants to replace two small delivery trucks with one larger delivery truck. The old trucks are valued at $13,000 each. The new truck will cost $52,000. If Cooper’s controllable margin is $97,000 and their operating assets were valued at $580,000 before they bought the new truck, what will their new ROI be? A :17.5% B : 16.0% C : 15.3% D : 16.7%
Required: A. What is the breakeven point in unit sales and dollars for each type of Bats at the current sales mix? B. What is the breakeven point in unit sales and dollars for each type of Bat at the current sales mix if the tax rate is 40%? C. The Accountant is considering buying new production equipment. The new equipment will increase fixed cost by twice and will decrease the variable cost by 50%. Assuming the same sales mix, how many of each type of bat does Nadalneed to sell to break even?
H2. A clothing manufacturer is considering whether to add hoodies to its range of products. The hoodies would sell for $45 each and the company expects to sell 10,000 units per year. Selling hoodies, however, would cause sales of conventional jumpers to decrease by 1,000 units per year. The jumpers sell for $43 per unit. The variable costs of production are $25 per unit for hoodies and $20 per unit for jumpers. If the company adds hoodies to its range of products, fixed costs will increase by $56,000 per year and annual depreciation will increase by $21,000. What is the incremental operating cash flow from selling hoodies, if the corporate tax rate is 30%? Please show proper step by step calculation
FULL QUESTION: Kinky Copies may buy a high-volume copier. The machine costs $100,000 and this cost can be fully depreciated immediately. Kinky anticipates that the machine actually can be sold in 5 years for $30,000. The machine will save $20,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $10,000. The firm’s marginal tax rate is 21%, and the discount rate is 8%. (Assume the net working capital will be recovered at the end of Year 5.) What is the NPV of this project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)
(Ignore income taxes in this problem.) Your Company uses a discount rate of 10%. The company has an opportunity to buy a machine now for $38,000 that will yield cash inflows of $10,000 per year for each of the next five years. The machine would have no salvage value. The net present value of this machine to the nearest whole dollar is: If the NPV is negative, enter your number with a – in front. Otherwise, just enter the number.
11) Istanbul Company currently sells cellphones for $500. It has costs of $320. A competitor is bringing a new cell phone to market that will sell for $430. Management believes it must lower the price to $430 to compete in the market for cell phones. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Istanbul Company sales are currently 100,000 cell phones per year. What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent)? A) $224.00 B) $238.18 C) $266.38 D) $290.00 E) $311.00

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