Consider the financial aspects of the digital thermometer project. The project c

Question

Consider the financial aspects of the digital thermometer project. The project cost is estimated at $10,000. The total manufacturing cost of the digital thermometer, as called for in the specifications, total $150(that is, $95 parts plus $40 labor plus $15 overhead). In order to sell each digital thermometer, consider an additional cost of $50 to cover the company's administrative overhead and selling expenses. The net selling price of each digital thermometer will be $250. Determine the following using general problem solving skills without considering the changing value of money due to inflation: a. What is the net profit for each digital thermometer sold? b. If the net profit is used to pay off the project development costs, how many digital thermometers will have to be sold to recover the $10,000 investment? c. At the projected annual volume of 1000 units per year for the product, roughly how long will it take until the $10,000 is recovered? "This is the break-even point for the company.

Explanation / Answer

a. net profit = price - costs = 250-150-50 = 50 b. 10,000/50= 200 c. so if it is 1000 units per year 200 unites is 1/5 of 1000, so it will take 1/5 of a year or 2.4 months please rate me

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