This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: A maker of kitchenware is planning on selling a new chef-quality kitchen knife. The manufacturer ... (Read 129 times)

magmichele12

  • Hero Member
  • *****
  • Posts: 559
on: Jul 9, 2019
A maker of kitchenware is planning on selling a new chef-quality kitchen knife. The manufacturer expects to sell 1.6 million knives at a price of $120 each. These knives cost $80 each to produce. Selling, general, and administrative expenses are $500,000. The machinery required to produce the knives cost $1.4 million, depreciated by straight-line depreciation over five years. The maker determines that the EBIT break-even point for units sold and sale price is less than these estimates and that the EBIT break-even point for costs per unit, SG&A, and depreciation are greater than these estimates, so decides to go ahead with manufacturing the knife. Was this the correct decision?
◦ Yes, since a positive EBIT ensures that the project will have a positive net present value (NPV).
◦ No, since the cost per unit should be greater than the EBIT-break even point for cost of goods if the project is to have a positive EBIT.
◦ Yes, since if the estimates for each parameter are correct , the EBIT will be positive.
◦ It cannot be determined whether the decision was correct, since other factors contributing to the project's net present value (NPV), such as the upfront investment, have not been included in the analysis.
Fundamentals of Corporate Finance ¦ Berk, DeMarzo, Harford ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by magmichele12 on Jul 9, 2019

moormoney

  • Sr. Member
  • ****
  • Posts: 326
Reply #1 on: Jul 9, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 25% of students answer this correctly


magmichele12

  • Hero Member
  • *****
  • Posts: 559
Reply #2 on: Jul 9, 2019
TY


moormoney

  • Sr. Member
  • ****
  • Posts: 326
Reply #3 on: Jul 9, 2019
You're welcome


« previous next »
 

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

Did you know?

In 1885, the Lloyd Manufacturing Company of Albany, New York, promoted and sold "Cocaine Toothache Drops" at 15 cents per bottle! In 1914, the Harrison Narcotic Act brought the sale and distribution of this drug under federal control.

Did you know?

The average human gut is home to perhaps 500 to 1,000 different species of bacteria.

Changes in light quality with depth: (a) the rich colours on a shallow coral reef; Changes in light quality with depth: (a) the rich colours on a shallow coral reef;
Trends in Air Quality Trends in Air Quality
An organizational specialist is hired as a consultant to a company planning to open a coffee ... An organizational specialist is hired as a consultant to a company planning to open a coffee ...
AAC, Inc. is planning to issue $5,000,000 in 180-day maturity notes paying a rate of 12 percent ... AAC, Inc. is planning to issue $5,000,000 in 180-day maturity notes paying a rate of 12 percent ...
A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower ... A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower ...
Sonal bought a coat for $198.88, which included 8% PST and 5% GST. What was the selling price ... Sonal bought a coat for $198.88, which included 8% PST and 5% GST. What was the selling price ...
Video: The Krebs Cycle Animation

For a complete list of videos, visit our video library