Question
Question #4 A production manager has obtained the following estimates of costs/revenues for magnatrons. Their plan is to produce these magnatrons for 5 years. Yearly
| Question #4 |
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| A production manager has obtained the following estimates of costs/revenues for magnatrons. Their plan is to produce these magnatrons for 5 years. |
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| Yearly sales = 1,000 units/year |
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| Sales Price = $50/unit |
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| Variable Cost = $5.25/unit |
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| Initial Investment = $50,000 |
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| (5) How many units does the company need to produce/sell to breakeven? |
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| (2) Does the company break even during year 1? |
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| (3) Suppose the company can reduce the Variable Costs by $1.00 per unit if they invested in the "latest technology" for $60,000 (vice $50,000). Based upon the potential profitability over the 5 year period only, should the company invest in the latest technology? | ||||||||||
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