7- A part is to be used in the assembly of a product. Alternative 1 is to manufacture it in-houseand alternative 2 is to purchase from outside. Determine the break-even quantity per yearbetween the two alternatives using the data gven in the table and =10%.[Note: You may use TC=FC+vQ and TC1=TC2 per year]Alternative 1: A machine will be needed for production: Initial cost of theManufacturethe Partmachine will be P=$72,000 and salvage value will be F=s8000dollars after 6 years of life. The variable production cost will beV=$1.6 per unit.Alternative 2:Purchase thepart fromOutsideThe part will be purchased at a cost of v2=$6 per unit.a)12000 Unitsb) O 1500 Unitsc)O 4568 Unitsd)3522 Unitse)1364 UnitsO Leave blank

Breakeven quantity is where the there is no profit and no loss and there is no difference between…

and alternative 2 is to purchase from outside. Determine the break-even qua between the two alternatives using the data gven in the table and i=10%. [Note: You may use TC=FC+v,Q and TC1 TC2 per year] Alternative 1: Manufacture the Part A machine will be needed for production: Initial cost of the machine will be P=$72,000 and salvage value will be F=$8000 dollars after 6 years of life. The variable production cost will be V=$1.6 per unit. Alternative 2: Purchase the part from The part will be purchased at a cost of v2=$6 per unit. loutside

and alternative 2 is to purchase from outside. Determine the break-even qua between the two alternatives using the data gven in the table and i=10%. [Note: You may use TC=FC+v,Q and TC1 TC2 per year] Alternative 1: Manufacture the Part A machine will be needed for production: Initial cost of the machine will be P=$72,000 and salvage value will be F=$8000 dollars after 6 years of life. The variable production cost will be V=$1.6 per unit. Alternative 2: Purchase the part from The part will be purchased at a cost of v2=$6 per unit. loutside

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

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