The marvel company is considering whether or not to construct a new robotic prod

Question

The marvel company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $594,000 and it is expected to have a six-year life with annual depreciation expense of $99,000 and no salvage value. Annual sales from the new facility are expected to be 1,970 units with a price of $930 per unit. Variable production costs are $650 per unit, while fixed cash expenses are $77,000 per year.

The accounting break-even units of production is _____ Units. (Round to the nearest integer)

Explanation / Answer

OK cash break even which means you don't take depreciation into account, so you have 77,000/(930-650)= 275.

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