
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:The manufacturer of a product that has a variable cost of $2.40 per unit and total fixed cost of $125,000 wants to determine the level of output necessary to avoid losses.
a. What level of sales is necessary to break-even if the product is sold for $4.15? Round your answer to the nearest whole number.
units
What will be the manufacturer's profit or loss on the sales of 100,000 units? Round your answer to the nearest dollar.
$
b. If fixed costs rise to $166,000, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number.
units
c. If variable costs decline to $2.00 per unit, what is the new level of sales necessary to break-even? Round your answer to the nearest whole number.
units
d. If fixed costs were to increase to $166,000, while variable costs declined to $2.00 per unit, what is the new break-even level of sales? Round your answer to the nearest whole number.
units
e. If a major proportion of fixed costs were noncash (depreciation), would failure to achieve the break-even level of sales imply that the firm cannot pay its current obligations as they come due? Suppose $98,000 of the above
fixed costs of $125,000 were depreciation expense. What level of sales would be the cash break-even level of sales? Use the initial variable cost in your calculations. Round your answer to the nearest whole number.
units
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