Determine the break-even point sales in units and in dollars

Assignment Help Financial Accounting

Reference no: EM133338957

Question: SPE Ltd is thinking about replacing a current machine with a new and faster machine that will produce a more reliable product. This change that will result in a super product is expected to allow Walton to increase its sales price for the product. The change will increase fixed costs and variable cost as well.

Cost item Old machine New machine

Monthly fixed cost $240,000 $500,000

Variable cost per unit $ 28 $28

Sales price per unit $36 $40

Required:

1) Determine the break-even point sales in units and in dollars for the two machines

2) Determine the sales level in units at which the new machine will achieve after tax net income that equals 10% of sales, provided that income tax rate is 20%

Reference no: EM133338957

Questions Cloud

Why are insurance companies so regulated : Discuss the parts of the insurance contract and the general, particular and special conditions. Why are insurance companies so regulated?

Npv analysis to determine if the company should launch : Use an NPV analysis to determine if the company should launch this product?RCM has a beta of 2. The current market risk premium is 5% and the current risk-free

What is her total salary for the including base salary : Kristi makes a base monthly salary of 2700. As a vendor, she must sell 30000 worth of items per month. She also makes a 10% commission on all sales beyond

How would you investigate the incident : As an occupational health and safety officer, how would you investigate the incident?

Determine the break-even point sales in units and in dollars : Determine the sales level in units at which the new machine will achieve after tax net income that equals 10% of sales, provided that income tax rate is 20%

How does disney try to redress prejudice and discrimination : What areas of employment discrimination does Disney seem to be targeting with their diversity programs?

Explain the difference between risk and uncertainty : Explain the difference between risk and uncertainty in the context of investment appraisal and describe how probability analysis can be used to incorporate

What are the quantities of unit sales at the accounting : What are the quantities of unit sales (=Q) at the accounting break-even point? What are the quantities of unit sales (=Q) at the cash break-even point?

Determine at the current savings rate how close to the goal : As the Longs Financial Planner, are they on the right track to reach their retirement goal? Please ensure you fill in the TVM chart below, then using a TVM

User Account

All Pages