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QUESTION
Samuelson, Inc., has just purchased a $650,000 machine to produce calculators. The machine will be fully
Samuelson, Inc., has just purchased a $650,000 machine to produce calculators. The machine will be fully
depreciated by the straight-line method over its economic life of four years and will produce 41,000 calculators each year. The variable production cost per calculator is $11, and total fixed costs are $900,000 per year. The corporate tax rate for the company is 40 percent.
For the firm to break even in terms of accounting profit, how much should the firm charge per calculator?
