DXZ,IncCurrently Produces One Product Which Sells for $250 Per Unit

question 92

Essay

DXZ,Inc.currently produces one product which sells for $250 per unit.The company's fixed costs are $75,000 per year; variable costs are $205 per unit.A salesman has offered to sell the company a new piece of equipment which will increase fixed costs to $100,000.The salesman claims that the company's break-even point will not be altered if the company purchases this equipment.What will be the company's new variable cost per unit?

---

Definitions:

Financing Agreement

A contract in which one party provides money, goods, or services to another party in exchange for eventual repayment or other financial terms.

Priority

The established order of importance or precedence among items or tasks.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to obtain a loan, that provides a lender the right to repossession if the borrower defaults.

Collateral

An asset or property that a borrower offers to a lender as security for a loan.