- 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)|
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.