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What is the breakeven sales required to not operate at loss

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Questions -

1) Suppose Farmer John purchases an additional facility for $2 million in the current operating period in order to expand his pig enterprise. If variable costs are 88.34% of pig sales, what is the breakeven sales required to not operate at a loss?

2) Continuing from the previous question, suppose Farmer John's actual pig sales were $18 million; what is the contribution to profit of the newly purchased facility?

3) If the new pig facility is expected to generate $112,000 each year for 15 years, by the payback period method, should the investment in the facility be accepted?

Reference no: EM132988246

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