Question
Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $5.43 per unit, and the variable labor cost is $3.13 per unit. (i)
Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $5.43 per unit, and the variable labor cost is $3.13 per unit. (i) What is the variable cost per unit? (ii) Suppose NSI incurs fixed costs of $720,000 during a year in which total production is 280,000 units. What are the total costs for the year?
In each of the following cases, find the unknown variable:
| No | Break-Even Point in Unit | Unit Price | Unit Variable Cost | Fixed Cost |
| 1 | $165,000 | ? | $43 | $4,350,000 |
| 2 | $4385 | $98 | ? | $265,000 |
| 3 | ? | $11 | $4 | $2,040 |
| 4 | $112,800 | $41 | $30 | ? |
i. Buy Coastal, Inc., imposes a payback cutoff of three years for its international investment projects. If the
company has the following two projects available, should it accept either of them?
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | -$40,000 | -$60,000 |
| 1 | 19,000 | 14,000 |
| 2 | 25,000 | 17,000 |
| 3 | 18,000 | 24,000 |
| 4 | 6,000 | 270,000 |
ii. An investment project provides cash inflows of $765 per year for eight years. What is the project payback period if the initial cost is $2,400? What if the initial cost is $3,600? What if it is $6,500?
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