Hammer Company Proposes to Invest $6 Million in a New

Multiple Choice

Hammer Company proposes to invest $6 million in a new type of hammer-making equipment. The fixed costs are $1.0 million per year. The equipment is expected to last for five years. The manufacturing cost per hammer is $1 and the selling price per hammer is $6. Calculate the break-even volume per year. (Ignore taxes.)

A) 500,000 units
B) 600,000 units
C) 100,000 units
D) None of the above