Break-Even Analysis

question 28

Multiple Choice

Break-even analysis. ClockWatchers is about to introduce a new employee monitoring tool and has determined that it will charge $100 per unit. The company must decide whether or not to purchase a high-capacity manufacturing machine. If the high-capacity machine is selected, then the cash fixed costs will be $5,000 per year, with variable costs of $50 per unit and depreciation and amortisation expenses of $2,000. Otherwise the fixed costs will be $2,000, with variable costs of $75 per unit and depreciation and amortisation expenses of $500. If EBIT Break-even is how the company evaluates its projects, then above what level of expected sales should ClockWatchers choose the high fixed cost alternative?

• A) 60 units
• B) 90 units
• C) 120 units
• D) 180 units

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Definitions:

Gender Differences

Variations in characteristics, behaviors, physical, psychological, and social traits typically associated with being male or female.

Mating Preferences

The criteria or qualities an individual looks for in a partner when choosing a mate.

Evolutionary Perspective

A theoretical approach that explains various aspects of human nature as a result of evolutionary processes that have shaped the survival and reproductive success of our ancestors.

Casual Sex

Sexual activity occurring outside of a long-term romantic relationship without the expectation of commitment.