Question
ABC Inc. will be producing a new line of smart robot vacuum. If the large factory is chosen, the cost per unit to produce each
ABC Inc. will be producing a new line of smart robot vacuum. If the large factory is chosen, the cost per unit to produce each unit will be $230 while the cost per unit will be $280 for the small factory. The large factory would have fixed cash costs of $280,000,000 and a depreciation expense of $10,000,000 per year, while those expenses would be $140,000,000 and $5,000,000 in the small factory. Unit price is $1000 for both projects.
b) Calculate the number of unit sales for which the accounting operating profit is the same, regardless of the factory choice. Interpret the result. (2 marks)
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