Processing equipment in the company main assembly line

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Reference no: EM131264209

The CEO has tapped you to personally assess a certain proposal for processing equipment in the company's main assembly line. It is a secret operation as the CEO suspects corporate spies as looking into the plans, but he cannot tell for sure who it is if anyone? Output would supply regional facilities throughout the country. The overall cost of this proposal excluding any marketing studies and consulting fee will be $13,460,000. According to IRS tables, the project fits into the 5 yr. MACRS class, but the firm will use straight-line depreciation in the analysis as the expected life is the same 5 year benchmark. Annual fixed cash operating costs of $4,210,000 are expected to be incurred. The sales price per unit for output produced will be $49,500 and variable costs on a per unit basis will come in at $15,700. The CEO wants to know the approximate sales level in units that are needed in order to break even in an accounting sense. What level of sales would be needed to reach this breakeven position? You must show your work to receive credit.

Reference no: EM131264209

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