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Homework: Homework Four Save Score: 0 of 2 pts 5 of 10 (0 complete) HW Score: 0%, 0 of 20 pts B 13-8 (book/static) Question Help * (Related to Checkpoint 13.4) (Break-even analysis) The Marvel Mitg. Company is considering whether or not to construct a new robotic production faclity. The cost of this new facility is $600,000 and it is expected to have a six-year life with annual depreciation expense of $100,000 and no salvage value. Annual sales from the new facility are expected to be 2,000 units with a price of $1,000 per unit. Variable production costs are $600 per unit, and fixed cash expenses are $80,000 per year a. Find the accounting and the cash break-even units of production b. Will the plant make a profit based on its current expected level of operations? c. Will the plant contribute cash flow to the firm at the expected level of operations? a. The accounting break-even units of production is units. (Round to the nearest whole number.) Enter your answer in the answer box and then click Check Answer parts Clear All Check Answer

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a Accounting Break Even point = Fixed costs + Depreciation/Contribution per unit (80000+100000)/(1000-600) 450 Accounting break even units 450 units Cash break even point = Fixed costs/Contribution per unit 80000/400 200 Cash Break even units 200 b Income Statement Sales (2000*1000) $2,000,000 Less : Variable costs (2000*600) $1,200,000 Contribution $800,000 Less : Fixed costs $80,000 Less : Depreciation $100,000 Net Profit $620,000 The company is able to make profits on its current level of expected operations c Income Statement Sales (2000*1000) $2,000,000 Less : Variable costs (2000*600) $1,200,000 Contribution $800,000 Less : Fixed costs $80,000 Less : Depreciation $100,000 Net Profit $620,000 Add : Depreciation $100,000 Cash flow $720,000 The company is able to generate cash flow on its current level of expected operations

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