Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. abc corporation has existing property and equipmen

ABC corporation has existing property and equipment that is not in use. The company is considering...

Free

50.1K

Verified Solution

Question

Finance

ABC corporation has existing property and equipment thatis not in use. The company is considering the use of this propertyand equipment. One option is to use the property and equipment toproduce a new product. Estimates for demand of this product are30,000 units annually for the first 5 years and 20,000 unitsannually for the following 6 years. Beyond that, the product isconsidered to be obsolete and production will cease. Price andvariable costs would be $100 and $65, respectively. Fixed costswould be $225,000 per year.

What is the Break-even price?

Answer & Explanation Solved by verified expert
4.4 Ratings (938 Votes)

Below is the table

Assuming since 30000 units can be sold for 1st 5 years below table states that if 2000 units were produced and increased year on year, by 6th year if used to full capacity break-even will happen

Years Units Sales Variable cost Fixed cost Total cost Profit/loss
1 2000            200,000 130000 225000 355000 (155,000)
2 3000            300,000 195000 225000 420000 (120,000)
3 4000            400,000 260000 225000 485000     (85,000)
4 5000            500,000 325000 225000 550000     (50,000)
5 6000            600,000 390000 225000 615000     (15,000)
6 20000         2,000,000 1300000 225000 1525000    475,000

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

ABC corporation has existing property and equipment thatis not in use. The company is considering the use of this propertyand equipment. One option is to use the property and equipment toproduce a new product. Estimates for demand of this product are30,000 units annually for the first 5 years and 20,000 unitsannually for the following 6 years. Beyond that, the product isconsidered to be obsolete and production will cease. Price andvariable costs would be $100 and $65, respectively. Fixed costswould be $225,000 per year.What is the Break-even price?

Other questions asked by students

Q

A company is planning its advertising strategy for next year for its three major products. Since...

Advance Math
Q

concrete C25 mix design lab report

Civil Engineering
Q

HUMAN RESOURCE MANAGEMENT Discussion- Discuss the activities your company has undertaken to create an established level of ethics,...

General Management
Q

Courses Physics Electric Field and Potential Question 1 A charged particle of mass m and...

Physics
Q

B X 18 8 P X Solve for x x 9 PQ is a Mid...

Geometry
Q

The graph illustrates a normal distribution for the prices paid for a particular model of...

Statistics
Q

Let d ghi Sa 56 10c A d e2f 9 h 21 Then A B...

Algebra
Q

Richards Corporation had net income of $225,666 and paid dividends to common stockholders of...

Accounting
Q

8-14 Evaluating internal control over cash receipts Dogtopia sells pet supplies and food and handles...

Accounting
Q

Required information The Foundational 15 (Algo) (LO11-2, LO11-3, LO11-4, LO11-5, LO11-6) (The following information applies...

Accounting
Q

#1 Check my work Exercise 11-3 Payback period computation; straight-line depreciation LO P1...

Accounting
Q

Which of the following statements gives the MOST correct definition of a repair for the...

Accounting