Mod Inc. sells parts for $80 each. Fixed costs are $1,200 per year and variable costs...

Mod Inc. sells parts for $80 each. Fixed costs are $1,200 per year and variable costs are $65 per unit. If the initial investment is $6,600 and is expected to last for 5 years and the firm pays 35% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 12%.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Mod Inc. sells parts for $125 each. Fixed costs are $1,800 per year and variable costs...

Mod Inc. sells parts for $125 each. Fixed costs are $1,800 per year and variable costs are $80 per unit. If the initial investment is $10,000 and is expected to last for 8 years and the firm pays 35% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 8 years to a final value of zero, and the discount rate is 12%.Please show all work!

Please answer the whole question not partial. Mod Inc. sells parts for $150 each. Fixed costs...

Please answer the whole question not partial. Mod Inc. sells parts for $150 each. Fixed costs are $2,500 per year and variable costs are $100 per unit. If the initial investment is $15,000 and is expected to last for 10 years and the firm pays 30% taxes, what is the accounting and economic break-even level of sales respectively? The initial investment will be depreciated straight-line over 10 years to a final value of zero, and the discount rate is 10%....

At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are...

At XLT Inc., variable costs are $80 per unit, and fixed costs are $40,000. Sales are estimated to be 4,000 units. a. How much would absorption costing operating income differ between a plan to produce 8,000 units and a plan to produce 10,000 units? b. How much would variable costing operating income differ between the two production plans?

A project generates $7,000 in revenue each year. It has the following costs: fixed cost:$1,200/year variable...

A project generates $7,000 in revenue each year. It has the following costs: fixed cost:$1,200/year variable cost: 65%of revenue depreciation: $400/year A) If sales increases by 20%, what will be the increase in pretax profits? (Hint: Calculate the base case pretax first then apply the sales growth) B) What is the degree of operating leverage (DOL) for this project?

Modern Artifacts can produce keepsakes that will be sold for $130 each. Nondepreciation fixed costs are $1,600 per year, and variable costs are $80 per unit.

Modern Artifacts can produce keepsakes that will be sold for $130 each. Nondepreciation fixed costs are $1,600 per year, and variable costs are $80 per unit. The initial investment of $4,800 will be depreciated straight-line over its useful life of 6 years to a final value of zero, and the discount rate is 13%. a. What is the degree of operating leverage of Modern Artifacts when sales are $7,020? (Do not round intermediate calculations. Round your answer to 2 decimal places.)...

Plymouth Corp. sells units for $100 each. Variable costs are $75 per unit, and fixed costs...

Plymouth Corp. sells units for $100 each. Variable costs are $75 per unit, and fixed costs are $200,000. If Plymouth leases a new machine, fixed costs will increase by $60,000 a year, but production will be more efficient, saving $5 per unit. At what level of production will Plymouth be indifferent between leasing and not leasing the new machine?

Elmwood, Inc. currently sells 12,800 units of its product per year for $108 each. Variable costs...

Elmwood, Inc. currently sells 12,800 units of its product per year for $108 each. Variable costs total $83 per unit. Elmwood’s manager believes that if a new machine is leased for $208,000 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $16.00 per unit, but Elmwood is hoping to sell the modified units for $138 each. a-1. Should Elmwood modify the units or sell them as is?...

Elmwood, Inc. currently sells 13,000 units of its product per year for $110 each. Variable costs...

Elmwood, Inc. currently sells 13,000 units of its product per year for $110 each. Variable costs total $85 per unit. Elmwood’s manager believes that if a new machine is leased for $224,250 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $15.00 per unit, but Elmwood is hoping to sell the modified units for $140 each. a-1. Should Elmwood modify the units or sell them as is?...

Super Gutter sells pipes for $11 each. The unit variable costs per pipe are $8.00. Fixed...

Super Gutter sells pipes for $11 each. The unit variable costs per pipe are $8.00. Fixed costs total $4,820. Required: 7. What is the contribution margin per pipe? 8. What is the break-even point in dollars? 9. How many pipes must be sold to earn a pre-tax income of $5,000? 10. What is the margin of safety assuming 1,800 pipes are sold?

A company has $30 per unit in variable costs and $1,200,000 per year in fixed costs....

A company has $30 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 104,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?

Subjects