A company plans to manufacture a product and sell it for $3.00 per unit. Equipment to manufacture the product will cost $250,000 and will have a net salvage value of $12,000 at the end of its estimated economic life of 15 years. The equipment can manufacture up to 2,000,000 units per year. Direct labour costs are $0.25 per unit, direct material costs are $0.85 per unit, variable administrative and selling expenses are $0.25 per unit, and fixed overhead costs are $200,000. What is the number of units that the company must manufacture in order to breakeven?

A company plans to manufacture a product and sell it for $3.00 per unit. Equipment to manufacture the product will cost $250,000 and will have a net salvage value of $12,000 at the end of its estimated economic life of 15 years. The equipment can manufacture up to 2,000,000 units per year. Direct labour costs are $0.25 per unit, direct material costs are $0.85 per unit, variable administrative and selling expenses are $0.25 per unit, and fixed overhead costs are $200,000. What is the number of units that the company must manufacture in order to breakeven?

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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