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Assume that an investor has a manufacturing plant that produces automotive spare parts. The sale price...

Assume that an investor has a manufacturing plant that produces automotive spare parts. The sale price of the part is 30 $/unit. The annual fixed cost of the plant is $2,000,000. Unit variable labor cost is 10 $/unit, unit variable material cost 5 $/unit, unit variable overhead cost 3 $/unit. a )How many units should be produced to start making profit (X)? b) How many units should be produced to make $1000,000 profit (Y)?
Select one:
a. X= 154545, Y= 245454
b. X= 166667, Y= 250000
c. X= 150000, Y= 250000
d. X= 200000, Y= 200000
e. X= 200000, Y= 325000
f. X= 250000, Y= 250000

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Answer #1

I think there is a mistake with the question and the profit required should be $100,000. Let me know in case this is not the case and I will redo the solution.

Please refer to the image below-

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