Youngblood Electronics is planning to manufacture a new handheld gaming device f

Question

Youngblood Electronics is planning to manufacture a new handheld gaming device for the preteen market. The data have been estimated for the product. Assuming a negligible market (salvage) value for the equipment at the end of ten years, determine the breakeven annual sales volume for this product. (11 a) Draw a CFD b) Formulate an EW equation Sales price $17.00 /unit c) Find breakeven annual sales volume for new handheld gaming device for the preteen market $300,000 Equipment cost Overhead cost Operating and maintenance costs Production time per 1,000 units Study period (planning horizon MARR S70,500 per year Total loperating $31 hour 100 hours 10 years 15% per year

Explanation / Answer

Answer:

First we will have to calculate the variable cost per unit if product

Overhead cost is fixed cost every year : $70500

for variable cost we have :

operating and maintenance cost : $31/per hour

Time taken to manufacture one unit:100/1000 : 0.1 hr

operating and manufacturing cost per unit : 31 *0.1 = $3.1/ per unit

Break even formula

slaes price * no of units = fixed cost + Varibale cost

lets say no of units is x

17*x = 70500 + 3.1 *x

x = 5072 is the break even volume

For equivalent annual worth(EAW) we will have to calculate equivalent worth of costs(EAC) involved and equivalent annual benefit(EAB)

EAW = EAB- EAC

EAC of capital costs= (present value of equipment - salvage value )(a/p,15%, 10) + Salvage value(a/p,15%,10)

Salvage value is zero

EAC of capital cost = 300000(a/p,15%,10)

EAC (O&M) = 70500 + 3.1*x

EAB : 17*x

EAW equation is

EAB - EAC = 17*x - (300000(a/p,15%,10) + 70500 +3.1*x)

No of units maunfactured per year not given So has been taken N in cash flow equation. if the equation has to be calculated at break even volume just put 5072 in the equation and calculate the numbers

0 1 2 3 4 5 6 7 8 9 10 equipment cost -300000 Overhead cost 70500 70500 70500 70500 70500 70500 70500 70500 70500 70500 Variable cost per unit $3.1 $3.1 $3.1 $3.1 $3.1 $3.1 $3.1 $3.1 $3.1 $3.1 Sales price 17 17 17 17 17 17 17 17 17 17 No of units made N N N N N N N N N N Revenue(Sales price* no of units) 17*N 17*N 17*N 17*N 17*N 17*N 17*N 17*N 17*N 17*N Total cost( fixed + variable cost) 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N 70500+3.1*N Cash flow -300000 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N) 17*N -(70500+3.1*N)

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.