Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / You manufacture face masks

You manufacture face masks

Finance

You manufacture face masks. Sales are projected at 15,500 face masks per year over the next four years. It will cost you $44,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in four years, this equipment can be salvaged for $32,000. Your fixed production costs will be $65,000 per year, price per unit is $7, and your variable production costs should be $1.50 per unit ($0.50 per unit in variable material costs and $1 per unit in variable labor expense). You also need an initial investment in net working capital of $90,000. You require a return of 9 percent on your investment. Ignore taxes (tax rate is 0%). 

Quantity sold is projected as 15,500. If the quantity sold increases by 20%, operating cash flow (OCF) increases by 84.20%. What is the degree of operating leverage at this quantity level?

Option 1

Low Cost Option
Download this past answer in few clicks

2.94 USD

PURCHASE SOLUTION

Already member?


Option 2

Custom new solution created by our subject matter experts

GET A QUOTE