Modern Artifacts Can Produce Keepsakes That Will Be Sold for $80

question 17

Essay

Modern Artifacts can produce keepsakes that will be sold for $80 each.Non depreciation fixed costs are $1,000 per year and variable costs are $60 per unit.If the project requires an initial investment of $3,000 and is expected to last for 5 years and the firm pays no taxes, what are the accounting and economic break-even levels of sales? The initial investment will be depreciated straight-line over 5 years to a final value of zero, and the discount rate is 10 percent.

---

Definitions:

Liabilities

Financial obligations of a business that represent debts or amounts owed to others, due to past transactions or events.

Assets

Economic resources owned by a business that are expected to benefit future operations.

Owner's Equity

The residual interest in the assets of a business after deducting liabilities; represents the owner's claim on the business assets.