Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. An automation-based company in the central area of the industrial area produces sensors for water quality monitoring that can be accessed from electronic applications.

1. An automation-based company in the central area of the industrial area produces sensors for water quality monitoring that can be accessed from electronic applications. The company sells the unit for $20/unit, with fixed costs of $650,000/year and variable costs of $16/unit. The company is considering a new system to improve sensor features that will allow the company's revenue to increase to $22/unit. The proposed new system will result in a change in variable expenses based on a rate of $40/hour with 0.5 hours dedicated to producing each unit, as well as an increase in fixed costs to $600,000/year. Based on these data: a) Calculate and compare the annual BEP quantities for the current system and the proposed system. What can you conclude from your results? b) Draw a graph of the profit relationship and the estimated BEP value between the system currently used and the proposed system. Comment on the results of the graphs you get. c) If you were the policy maker at the company, what policy would you take that would be of greatest benefit to the company, and give your reasons. d) Calculate the sensitivity of the analysis of the proposed system equipped with a spider plot graph. The calculation of the sensitivity of the proposed PW system is based on the best estimate (most likely) by considering the range of 30% change in all estimates in the following data, and considering the useful life of the system is five years. Proposed system capital investment = $2,500,0000 Increased income using the proposed system $22/unit assuming total production = 1.000.000 units/year Annual expenses $600,000 (as per data above) MARR 10%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sap Fixed Assets Accounting

Authors: Jorg Siebert, Dieter Schlagenhauf

1st Edition

1497314380, 978-1497314382

More Books

Students also viewed these Accounting questions