The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management:Sales priceS17.50/unitEquipment costS250,000Incremental overhead cost|550,000/yearSales and marketing cost$150,000/yearOperating and maintenance cost $25/operating hourProduction time/1,000 units100 hoursPackaging and shipping costs0.50/unitPlanning horizonMinimum attractive rate of return 15%5 yearsThe managers would like to know the viability of this product and how it would roll out in sales.(a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable?(b) If the target revenue is from 30,000 units sold, what is the expected profit?(C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment?(d) Provide graph for (a)

A break-even analysis is a device that entrepreneurs can use to decide when their business will…

Answered: The Gigadigit Manufacturing Inc. is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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