Finance Essay

1136 Words5 Pages
94. Cool Shades, Inc. (CSI) manufactures biotech sunglasses. The variable materials cost is $1.69 per unit, and the variable labor cost is $3.04 per unit. Suppose the firm incurs fixed costs of $750,000 during a year in which total production is 450,000 units and the selling price is $11.50 per unit. What is the cash break-even point? A. 76,453 units B. 88,652 units C. 110,783 units D. 128,907 units E. 140,768 units QCash Break-even = $750,000/($11.50 - $1.69 - $3.04) = 110,783 units AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 11-1 Learning Objective: 11-3 Section: 11.4 Topic: Cash break-even 95. Mountain Gear can manufacture mountain climbing shoes for $14.95 per pair in variable raw material costs and $18.46 per paid in variable labor costs. The shoes sell for $127 per pair. Last year, production was 170,000 pairs and fixed costs were $830,000. What is the minimum acceptable total revenue the company should accept for a one-time order for an extra 10,000 pairs? A. $149,500 B. $287,600 C. $334,100 D. $380,211 E. $1,164,100 Marginal total revenue = 10,000 ( ($14.95 + $18.46) = $334,100 AACSB: Analytic Bloom's: Application Difficulty: Basic EOC #: 11-2 Learning Objective: 11-3 Section: 11.3 Topic: Marginal cost 96. We are evaluating a project that costs $854,000, has a 15-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 154,000 units per year. Price per unit is $41, variable cost per unit is $20, and fixed costs are $865,102 per year. The tax rate is 33 percent, and we require a 14 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within (14 percent. What is the worst-case NPV? A. $984,613 B. $1,267,008 C.

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