The Modern Artefacts Company proposes to invest £5 million in a new manufacturing plant for keepsakes. Theplant that wil
Posted: Sat Nov 27, 2021 5:16 pm
The Modern Artefacts Company proposes to invest £5 million in a
new manufacturing plant for keepsakes. Theplant that will
depreciate on a straight-line basis. Fixed costs are £2 million per
year. A keepsakecosts £5 per unit to manufacture and sells for £20
per unit. If the plant lasts for three years and the cost of
capital is 12 percent, use the degree of operating leverage
formula to estimate accounting break-even level of annual
sales. You should assume there are no taxes?
Please show all workings.
new manufacturing plant for keepsakes. Theplant that will
depreciate on a straight-line basis. Fixed costs are £2 million per
year. A keepsakecosts £5 per unit to manufacture and sells for £20
per unit. If the plant lasts for three years and the cost of
capital is 12 percent, use the degree of operating leverage
formula to estimate accounting break-even level of annual
sales. You should assume there are no taxes?
Please show all workings.