Question: Submit your complete handwritten solution with graph. The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to

 Submit your complete handwritten solution with graph. The Gigadigit Manufacturing Inc.

is considering to produce a new product. The following data have been

Submit your complete handwritten solution with graph. The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management: Sales price $17.50/unit Equipment cost $250,000 Incremental overhead cost $50,000/year Sales and marketing cost $150,000/year Operating and maintenance cost $25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost $0.50/unit Planning horizon 5 years Minimum attractive rate of return 15% The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (c) if the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment? (d) Provide graph for (a)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!