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Bess [88]
3 years ago
14

Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as fo

llows: Equipment cost: $288,000/year Equipment salvage value at EOY5= $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning horizon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even?
Business
1 answer:
dusya [7]3 years ago
6 0

Answer:

It need  sales figure of 22,125 units per year to break even considering their currnent contribution marign and fixed cost.

Explanation:

fixed cost per year:

equipment lease cost: 288,000

other overhead cost  <u>     48,300   </u>

total fixed cost              336,300

contribution per unit:

sales revenue - variable cost

39.75 - 14.55 = 15.20

each units generates $15.20 dollar we need to save up for  336,300 dollars

break even point:

336,300 / 15.20 = 22,125 units

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