A process plant making 5000kg /day of a product selling for $1.75 per kg has annual direct production costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What is the fixed charge per kg at the break-even point? If the selling price of the product is increased by 10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 35 percent of gross earnings?
A process plant making 5000kg /day of a product selling for $1.75 per kg has annual direct production costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What is the fixed charge per kg at the break-even point? If the selling price of the product is increased by 10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 35 percent of gross earnings?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.4IP
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A process plant making 5000kg /day of a product selling for $1.75 per kg has annual direct
production costs of $2 million at 100 percent capacity and other fixed costs of $700,000. What is
the fixed charge per kg at the break-even point? If the selling price of the product is increased by
10 percent, what is the dollar increase in net profit at full capacity if the income tax rate is 35
percent of gross earnings?
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