A company is considering whether or not to construct a new robotic production fa

Question

A company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $624,000 and it is expected to have a six-year life wiht annual depreciation expense of $104,000 and no salvage value. Annual sales fro the new facility are expected to be 2,010 units with a price of $1040 per unit. Variable production cost are $640 per unit, while fixed cash expenses are $78,000 per year. Find the accounting and the cash break-even units of production. The accounting break-enen units of production is ____ units

Explanation / Answer

fixed accounting expenses = 78,000 + 104,0000 = 182,000 contribution margin = 1040 - 640 = 400 accounting break even = 182,000/400 = 455 answer: 455 units

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