Niko has purchased a brand new machine to produce its High Flight line of shoes.

Question

Niko has purchased a brand new machine to produce its High Flight line of shoes. The machine has an economic life of four years. The depreciation schedule for the machine is straight-line with no salvage value. The machine costs $492,000. The sales price per pair of shoes is $59, while the variable cost is $13. $173,000 of fixed costs per year are attributed to the machine. Assume that the corporate tax rate is 40 percent and the appropriate discount rate is 7 percent.

What is the financial break-even point in units ?

Explanation / Answer

Hello Pal,

First of all a very nice as well as intersting question from your side.

So now straight to the question, as asked above with all the information available from your side and from mine, the answer is as under:

After calculation of the above given information, we can conclude that the answer will be $928,301.

That is all I can say from the above given information by you, hope have solved your problem to some extent.

Regards.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.