Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost
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Question:
Jasper Auto Inc is going to invest in a new machine to produce Part A. The cost of the machine is $400,000. Part A will have variable cost per unit of $75.00 and the sales price per unit will be $140.00. Fixed costs will be $80,000. The machine is expected to have a life of eight years. Jasper Auto requires a return of 10% on their investments.
Required:
Ignoring the effect of taxes, calculate the following . Round all your answers to two decimal points.
- Accounting Break-even quantity (2 marks)
- Cash Break-even quantity (2 marks)
- Financial Break-even quantity (4 marks)
- Degree of operating leverage. (2 marks
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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