Question
Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost of the machine is $600,000. Part A will
Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost of the machine is $600,000. Part A will have variable cost per unit of $95.00 and the sales price per unit will be $150.00. Fixed costs will be $75,000. The machine is expected to have a life of ten years. Jasper Auto requires a return of 12% on their investments. Required: Ignoring the effect of taxes, calculate the following. Round your answers to two decimal points: Accounting Break-even quantity (2 marks) Cash Break-even quantity (2 marks) Financial Break-even quantity (4 marks) Degree of operating leverage. (2 marks)
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