A new assembly line for mass production of shoes is under investigation by a shoemanufacturer. The new line costs $200,000 and operating costs are expected to be $60,000 peryear. Planned annual production is 1600 pairs and the price of a pair of shoes is $80. The line’sservice life is considered to be five years, and the MV of the line five years later is expected to be30% of the original investment. Assume a 10% annual interest rate for the base case.a) How many shoes should the manufacturer produce to reach a break-even point?b) Does manufacturer make any profit under the given production plan? Explain.
A new assembly line for mass production of shoes is under investigation by a shoe manufacturer.
Jul 12, 2021 | Hire us to write