Natural Bodyworks produces the popular Ab Stretcher that they sell for $200 per unit. NBs total fixed costs (fixed operating costs + depreciation) for the Ab Stretcher are $200,000.Their variable costs are $30 per unit. They are financed entirely by equity and face a 20% corporate tax rate.

Given their current production level of 4,000 units what is their Net Operating Income?

Natural Bodyworks produces the popular Ab Stretcher that they sell for $200 per unit. NBs total fixed costs (fixed operating costs + depreciation) for the Ab Stretcher are $200,000.Their variable costs are $30 per unit. They are financed entirely by equity and face a 20% corporate tax rate.

If sales surge to 5,000 units, what is NBs new NOI?

Natural Bodyworks produces the popular Ab Stretcher that they sell for $200 per unit. NBs total fixed costs (fixed operating costs + depreciation) for the Ab Stretcher are $200,000.Their variable costs are $30 per unit. They are financed entirely by equity and face a 20% corporate tax rate.

Did NB's NOI go up or down? Why? Please give a verbal answer.

NBs managers are concerned about their operating leverage. The forecast sales of 3,500 units and would like to know if they will be profitable at this sales level.

The initial investment in the manufacturing facilities for the Ab Stretcher is $500,000, depreciated straight-line over the projects five-year economic life to a $0 salvage value. Sales price is $200 per unit and variable cost per unit is $30. Fixed operating costs are $100,000 per year and their tax rate is 20%.

What is NBs break-even point?

Managers project sales of 3,500 units. Given your calculation of the break-even point in questin 4, would you advise NBs to go ahead with the Ab Stretcher? Why or why not? Please give a verbal answer.