Process A has a fixed cost of $160,000 per year and a variable cost of $50 per unit. For Process B, 10 units can be produced in 1 day at a cost of $200. If the company’s MARR is 10% per year, what will the annual fixed cost have to be for Process B in order for the two alternatives to have the same annual total cost at a production rate of 1000 units per year?

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A: At break even point  Fixed cost = contribution

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A: Formula:

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A: Introduction:- Calculation of target profit as follows:- Target profit =Investment x 40%

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A: Selling Price for 10,000 units (10,000 * P21) P2,10,000 Relevant Cost:   Variable cost of…

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A: At break even  contribution is equal to  fixed cost

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A: Given that: Capital invested = $900,000 Target return on investment = 25%

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A: Contribution margin per unit = P15 x 35% = P5.25

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A: Break even point is the point where revenue is equal to variable cost and fixed cost.

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A: First cost = $ 200,000 Annual income = $ 78,000 MARR = 20%

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A: Given that:

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Q: Drape Corp. would like to market a new product at a selling price of P15 per unit. Fixed costs for…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.