Seivewright Cobbler, Inc

question 102

Essay

Seivewright Cobbler, Inc.can produce shoes that will be sold for $160 each.Non-depreciated fixed costs are $2,000 per year and variable costs are $120 per unit.If the project requires an initial investment of $6,000 and is expected to last for 5 years and the firm pays no taxes, what are the accounting and NPV break-even levels of sales?

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Definitions:

First-in

This principle dictates that the earliest goods to be added to inventory are the first ones to be removed from it, commonly applied in financial and inventory management.

Conversion Costs

The sum of labor and overhead costs that are necessary to convert raw materials into finished products.

Equivalent Units

Equivalent units is a concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units.

Weighted-average

A calculation that takes into account the varying degrees of importance or quantities of different items in a data set, providing a figure that reflects their proportional contributions.