# Question

K-Too Ever wear Corporation can manufacture mountain climbing shoes for $31.85 per pair in variable raw material costs and $22.80 per pair in variable labor expense. The shoes sell for $145 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,750,000. What were total production costs? What is the marginal cost per pair? What is the average cost? If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order? Explain.

## Answer to relevant Questions

Olin Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,400 per unit; variable costs = $220 per unit; fixed costs = $3.9 million; quantity = 85,000 units. Suppose the company ...Consider a project with the following data: accounting break-even quantity = 13,400 units; cash break-even quantity = 10,600 units; life = five years; fixed costs = $150,000; variable costs = $24 per unit; required return = ...Show that if we consider the effect of taxes, the degree of operating leverage can be written as:DOL = 1 + [FC × (1 -T ) - T ×D ]/OCFNotice that this reduces to our previous result if T 5 0. Can you interpret this in words?For each of the following, compute the presentvalue:Suppose you are still committed to owning a $190,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve a 12 percent annual rate of return and you want to buy the car in 9 years on the day you turn 30, how ...Post your question

0