7. Equipment costing PIM is expected to produce 10. 000 pieces of pipes dur ing its economic life before being replaced. Annual production of this equipment is 2, 500 pipes. The equi pment' s scrap value is estimated at P50, 000. The cost of housing the equipment is P25, 000 per year. Costs of power and maintenance per unit are P9. 00 and P7. 00, respectively. Cost of labor is P35. 00 per unit. Use sinking fund method of depreciation with = 12% a. What is the total fixed cost? b. What is the variable cost per unit? c. What is the total cost of production per unit?

7. Equipment costing PIM is expected to produce 10. 000 pieces of pipes dur ing its economic life before being replaced. Annual production of this equipment is 2, 500 pipes. The equi pment' s scrap value is estimated at P50, 000. The cost of housing the equipment is P25, 000 per year. Costs of power and maintenance per unit are P9. 00 and P7. 00, respectively. Cost of labor is P35. 00 per unit. Use sinking fund method of depreciation with = 12% a. What is the total fixed cost? b. What is the variable cost per unit? c. What is the total cost of production per unit?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 4P

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