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?

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Definitions:

External Failure Costs

Expenses incurred when products or services fail to meet quality standards after being delivered to the customer, including warranties and returns.

Warranty Costs

Expenses incurred due to fulfilling warranty claims, including repairs, replacements, and service costs associated with guaranteeing the product's performance.

Managerial Time

The allotment and management of time by individuals in managerial positions to achieve organizational objectives effectively.

Assignable Causes

Factors or variables that can be identified and controlled, explaining variations in a process or system.