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A manufacturer of an inspecting and profiling web controller has a fixed cost of \$83,000
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# Question : A manufacturer of an inspecting and profiling web controller has a fixed cost of \$83,000 : 2141824

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.

1) A manufacturer of an inspecting and profiling web controller has a fixed cost of \$83,000 per year and variable costs of \$60 per unit produced. If the product is sold at \$90 per unit, determine the breakeven quantity per year for the company.

2) Cougar Telemarketing is considering establishing a call center. The initial cost will be \$2,750,000 with a \$27,500 market value any time within a 13-year period. The fixed cost of the center will be \$830,000 per year with an average variable cost of \$3.00 per call. Cougar expects to generate revenue of \$5.25 per call with a capacity of 110,000 calls for the first year. The company also expects to increase the capacity uniformly each year. At an interest rate of 2% per year, determine the uniform amount the capacity must increase each year so that the company can recover its investment in 3 years.

3) Two processes are under consideration for a certain production. Process A requires acquisition of a new machine that is estimated to have an initial cost of \$65,000 and a salvage value of \$52,000 at the end of its useful life of 6 years. In addition, the process requires a fixed cost of \$47,000 per year and a variable cost of \$250 per day. Alternatively, Process B requires the use of human labor. The process will need 6 workers, each earning \$200 per day and will have a fixed cost of \$36,000 per year and additional variable costs of \$200 per day. Determine the minimum number of days per year required for the two processes to break even at an interest rate of 2% per year.

4) Two machines are under consideration for a new production line. Machine X costs \$50,000 and is expected to have a salvage value of \$6500 at the end of its useful life of 5 years. It will have a fixed cost of \$16,000 per year and a variable cost of \$55 per unit per year. On the other hand, machine Y costs \$55,000 and is expected to have a salvage value of \$7000 at the end of its useful life of 7 years. It will have a fixed cost of \$14,500 per year and a variable cost of \$58 per unit per year. Determine the quantity that must be produced for the two machines to break even at an interest rate of 3% per year.

5) Two different machines are under consideration for a reengineering project. Machine X is expected to have an initial cost of \$74,000 and an expected life of 7 years. It will have a fixed cost of \$10,000 per year and a variable cost of \$60 per unit per year. Process Y is expected to have a useful life of 9 years. It will have a fixed cost of \$8500 per year and a variable cost of \$57 per unit per year. Determine the amount the company can spend on Machine Y so the two machines will break even at an interest rate of 11% per year. Assume the current process capacity of 150 units per year is used for the analysis.

6) The estimated cash flows of an investment project are shown below.

 Item Estimated Cash Flows Sensitivity Range Initial investment, \$ 55,000 ±5% Annual revenue, \$ 7000 ±10% Annual expense, \$ 4500 ±10% Market value, \$ 1800 ±15% Project life, years 8 ±5%

Using an interest rate of 2% per year, analyze the sensitivity of the PW to changes in initial investment and annual revenue, and determine the breakeven percentage changes of these two factors.

## Solution 5 (1 Ratings )

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