Question about Break-Even Analysis
(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
$612,000
and it is expected to have a six-year life with annual depreciation expense of$102,000
and no salvage value. Annual sales from the new facility are expected to be2,050
units with a price of$1,060
per unit. Variable production costs are$630
per unit, and fixed cash expenses are$82,000
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?
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