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Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems
Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.
Model no. 6754:
Variable costs, $17.00 per unit
Annual fixed costs, $985,700
Model no. 4399:
Variable costs, $10.80 per unit
Annual fixed costs, $1,114,300
Corrigans selling price is $63 per unit for the universal gismo, which is subject to a 15 percent sales commission. (In the following requirements, ignore income taxes.)
1.How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer up to nearest whole number.)
2. Calculate the net income of the two systems if sales and production are expected to average 45,000 units per year.
4. Ignoring the information presented in part (3), at what volume level will the annual total cost of each system be equal? (Do not round intermediate calculations and round your final answer up to nearest whole number.)
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