# Question: Management believes it can sell a new product for 8 50

Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit.

a. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs.

b. Determine the break-even level using the above table and use Equation 19.5 to confirm the break-even level of output.

c. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?

a. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs.

b. Determine the break-even level using the above table and use Equation 19.5 to confirm the break-even level of output.

c. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?

**View Solution:**## Answer to relevant Questions

The management of a firm wants to introduce a new product. The product will sell for $4 a unit and can be produced by either of two scales of operation. In the first, total costs are TC 5 $3,000 1 $2.8Q. In the second scale ...Fill in the table using the following information. Assets required for operation: $2,000 Case A—firm uses only equity financing Case B—firm uses 30% debt with a 10% interest rate and 70% equity Case C—firm uses 50% ...You purchase machinery for $23,958 that generates cash flow of $6,000 for five years. What is the internal rate of return on the investment? Management of a firm with a cost of capital of 12 percent is considering a $100,000 investment with annual cash flow of $44,524 for three years. a. What are the investment’s net present value and internal rate of ...A risky $400,000 investment is expected to generate the following cash flows: a. If the firm’s cost of capital is 10 percent, should the investment be made? b. An alternative use for the $400,000 is a four-year U.S. ...Post your question