Use the following setup for question
A cloth manufacturing firm is deciding whether or not to invest in new machinery.The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000.The firm's current fixed costs are $9,000 and current marginal cost are $15.The firm currently charges $18 per unit.
-A pottery craftsman is debating attending the crafters fair.It costs $50 to set up the booth and $20 in transportation to get his pottery to the fair.He nets $5 for each of his pieces,number of pots he must sell to make going to the fair worth the cost?
A)10
B)12
C)14
D)16

Question

​Use the following setup for question
A cloth manufacturing firm is deciding whether or not to invest in new machinery.The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000.The firm's current fixed costs are $9,000 and current marginal cost are $15.The firm currently charges $18 per unit.
-​A pottery craftsman is debating attending the crafters fair.It costs $50 to set up the booth and $20 in transportation to get his pottery to the fair.He nets $5 for each of his pieces,number of pots he must sell to make going to the fair worth the cost?
A)​10
B)12
C)14
D)​16

Quizplus · Accepted Answer

To break even, the craftsman needs to cover the $70 total cost ($50 booth + $20 transportation) with the $5 net per piece. $70 / $5 = 14 pieces.

​Use the Following Setup for Question

Use the Following Setup for Question