Determine the annual breakeven quantity for (a) The current system (b) The new system. Wilson Partners manufactures
Question:
(a) The current system
(b) The new system.
Wilson Partners manufactures thermocouples for electronics applications. The current system has a fixed cost of $300,000 per year and a variable cost of $10 per unit. Wilson sells the units for $14 each. A newly proposed process will add onboard features that allow the revenue to increase to $16 per unit, but the fixed cost will now be $500,000 per year. The variable cost of the new system will be based on a $48 per hour rate with 0.2 hour required to produce each unit.
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Breakeven quantity is calculated as Fixed Cost divided by Contribution Margin It shows how many unit...View the full answer
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