- Briefly Explain Break-Even Point Analysis. Explain the concepts of fixed and variable costs and gave one example for each type of cost.
- The new plasma cutting machine that Tyco, Inc. is considering investing in has the following value driver estimates of fixed and variable costs:
| Expected or Base-Case | |
| Current Unit sales | 34,000 |
| Price per unit | $50 |
| Variable cost per unit | ($30) |
| Cash fixed cost per year | $(400,000) |
| Depreciation expense | $(250,000) |
What is the break-even level of units? If management expects to generate a total of $100,000 profit next year, how many more units should the company sell than today’s to achieve such goal? Please show your calculations.
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