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ABC Inc. Manufactures biotech sunglasses. The variable materialscost $1.43 per unit and the variable labour cost is $2.44 perunit.

  1. What is the variable cost per unit? ($3.87)
  2. Suppose the firm incurs fixed costs of $650,000 during a yearin which total production is 320,000 units. What are the totalcosts for the year? ($1,888,400)
  3. If the selling price is $10 per unit, what is the cashbreak-even point? If depreciation is $190,000 per year, what is theaccounting break-even point? (106,036 units; 137,031 units)

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Patrina Schowalter
Patrina SchowalterLv2
28 Sep 2019

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Night Shades Inc. (NSI) manufactures biotech sunglasses.The variable materials cost is $10.00 per unit, and the variablelabor cost is $5.50 per unit.

Varible Cost: 15.50

Total Cost: 3,600,000


If the selling price is $40.50 per unit, what is the cashbreak-even point? If depreciation is $300,000 per year, what is theaccounting break-even point? (Do not round intermediatecalculations. Round your answers to 2 decimal places, e.g.,32.16.)

Cash break even point:

Accounting break even point:

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.60 per unit, and the variable labor cost is $5.90 per unit.

a. What is the variable cost per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Variable cost $

b. Suppose NSI incurs fixed costs of $580,000 during a year in which total production is 240,000 units. What are the total costs for the year? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.)
Total cost $

c. If the selling price is $42.50 per unit, what is the cash break-even point? If depreciation is $380,000 per year, what is the accounting break-even point? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)
Cash break-even point units
Accounting break-even point units

We are evaluating a project that costs $650,000, has a five-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 47,000 units per year. Price per unit is $56, variable cost per unit is $26, and fixed costs are $845,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project.

a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Break-even point units

b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)

Cash flow $
NPV $


b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

ΔNPV/ΔQ $

b-3 Calculate the change in NPV if sales were to drop by 500 units. (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV would (Click to select) increase decrease by $

c. What is the sensitivity of OCF to changes in the variable cost figure? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

ΔOCF/ΔVC $

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