Reconsider Problem 3. Indicate whether each of the following statements is true or false by determining the
Question:
Reconsider Problem 3. Indicate whether each of the following statements is true or false by determining the new breakeven for each case. Each case is independent of the other cases.
Data from problem 3
Cecil’s Manufacturing is considering producing a new product. The sales price would be \($10.25\) per unit. The cost of the equipment is \($100,000.\) Operating and maintenance (O&M) costs are expected to be \($3,500\) annually. Based on a 7-year planning horizon and a MARR of 12 percent, determine the number of units that must be sold annually to achieve breakeven.
a. If the cost of the equipment doubles, the break-even volume will double.
b. If the revenue per unit doubles, the break-even volume will halve.
c. If the O&M costs double, the break-even volume will double.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt