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A production manager has obtained the following estimates of costs/revenues for radios. Their plan is to produce this model of radio for at least 5
A production manager has obtained the following estimates of costs/revenues for radios. Their plan is to produce this model of radio for at least 5 years. Yearly sales = 50,000 units/year (steady stateo growth expected) Sales Price = $250/unit Variable Cost = $199.37/unit Initial Investment = $2,521,000 (10) A. How many units does the company need to produce/sell to breakeven? (4) B. Does the company break even during the first year? (3) C. How much PROFIT does the company make over a 5-year production run? (3) D. Suppose the company can reduce the Variable Costs by $10.00 per unit if they invested in the "latest technology" for an additional $1,000,000 (FC Total $3,521,000). Based upon the potential profitability over the 5-year period only, should the company invest in the latest technology? How much additional profit, if any, does the investment in technology provide over the 5-year period
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