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Break even analysis The marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of the new facility

Break even analysis

The marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of the new facility is $630,000 and it is expected to have a six-year life with annual depreciation expense of $105,000 and now salvage value. Annual sales from the new facility are expected to be 1,950 units with a price of $1,000 per unit. Variable production costs are $560 per unit, and while fixed cash expenses are $79,000 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?

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