Question about Break-Even Analysis

Sigchi4life
Category:
Accounting
Price: $10 USD

Question description

(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 be

2,050

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?


Tutor Answer

(Top Tutor) Daniel C.
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School: University of Virginia
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