Miller Brothers has determined that an operating cash ﬂow of $24,300 will result in a zero net
present value for a proposed project. The ﬁxed costs of the project are $9,360 and the contribution
margin is $4.30. The company feels that it will capture 18 percent of the 60,000 unit market for this
product. Should the company develop the new product? Why or why not?
A) Yes; because the ﬁnancial break-even quantity is 7,828 units.
B) Yes; because the ﬁnancial break-even quantity is 8,001 units.
C) Yes; because the anticipated market share exceeds the break-even quantity by 2,403
units.
D) No; because the ﬁnancial break-even quantity is 7,828 units
E) No; because the ﬁnancial break-even quantity is 8,001 units

Question

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The Answer of Miller Brothers has determined that an operating cash ﬂow of $24,300 will result in a zero net
present value for a proposed project. The ﬁxed costs of the project are $9,360 and the contribution
margin is $4.30. The company feels that it will capture 18 percent of the 60,000 unit market for this
product. Should the company develop the new product? Why or why not?
A) Yes; because the ﬁnancial break-even quantity is 7,828 units.
B) Yes; because the ﬁnancial break-even quantity is 8,001 units.
C) Yes; because the anticipated market share exceeds the break-even quantity by 2,403
units.
D) No; because the ﬁnancial break-even quantity is 7,828 units
E) No; because the ﬁnancial break-even quantity is 8,001 units

Miller Brothers Has Determined That an Operating Cash ﬂOw of $24,300