A company is to start in 2021 gaining a gross revenue from selling mechanical products with a market size equals to $500 million and market share of 10%, In addition. the company states that the production demand is 200 units per hour with 50 working hours per week and 50 weeks per year. Other financial information are as follows: 

• The material cost is $20/unit The labor cost per unit is 15% of the unit price

 • The manufacturing overhead per unit is 75% of the material cost

 • To manufacture these products the company would like to purchase a $3 million equipment at the beginning of 2021, which can be used for years at end of the fifth year. 

• In 2021, the space rent is $1.5 million, salaries are $2.6 million, advertisement is $10 million, maintenance is 10% from equipment price, and other operating expenses are $30 million. 

• The assets of this company at the beginning of 2021 are equal to $90 million while the total equities + liabilities equal to $80 million. To balance the difference between the assets and Iliabilities, the company decided to take a loan from the bank with yearly interest of 5%. 

• The company must pay a tax of 5% from the net income before taxes. 

Calculate the number of units to be produced per hour to breakeven.

Answer rating: 100% (QA)

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