Question: Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and grass clippers. The company has invested $250,000 in developing this

Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and grass clippers. The

Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers and grass clippers. The company has invested $250,000 in developing this sharpener, which it would like to make back in the first year. This tool is about the size of a piece of chewing gum and costs $3 to make. Fixed costs for the sharpener are $10,000 per month. Diamond Machine's markup on sales is 30 percent. Remember: First determine fixed (already provided) and variable costs. . What is the price? . What is the contribution margin? . What is the monthly unit break-even point? Based on the initial investment above, what is year one unit breakeven volume with an expected level of profit, required to pay back the $250,000?

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Answer i Markup price 443 ii Target Return Price 360 iii Break Even Volume Mark ... View full answer

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