Question
Breakeven Practice Exercises1. It is going to cost your company $3.6 million to buy new equipmentneeded to make a new product. The product sells for
Breakeven Practice Exercises1. It is going to cost your company $3.6 million to buy new equipmentneeded to make a new product. The product sells for $75 per unit andcosts $40 per unit in materials and $10 per unit in labour to make. Youwill be able to make 1550 units per week and you can sell all that youmake. How long will it take your company to break even? (Show all yourwork and state your answer in the most appropriate terms.)2. It is going to cost your company $3.5 million to convert to a pull-1production system from the current push-8. It will take 3 months toconvert. It is expected that the new system will save you $67,000 permonth in rent and $850,000 per year on plant shutdowns. How long (inyears and months) will it take your company to break even? (Show allyour work and state your answer in the most appropriate terms.)3. It is going to cost your company $225,000 in moving and set-up costs tomove your retail store. It is expected that the new location will save you$300 per month in rent and $1,500 per year on your travel costs. Howlong (in years and months) will it take your company to break even?(Show all your work.)
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