Calculation of cash break-even quantity and financial break-even quantity.
In each of the following cases, find the unknown variable:
|
Accounting Break-Even
|
Unit Price
|
Unit Variable Cost
|
Fixed Costs
|
Depreciation
|
|
127,500
|
$41
|
$30
|
$820,000
|
?
|
|
135,000
|
?
|
43
|
3,200,000
|
$1,150,000
|
|
5,478
|
98
|
?
|
160,000
|
105,000
|
A project has the following estimated data: price=$68 per unit; variable costs=$41 per unit: fixed costs=$8,000; required return=15 percent; initial investment=$12,000; life=four years. Ignoring the effect of taxes, what is the accounting break-even quantity? The cash break-even quantity? The financial break-even quantity? What is the degree of operating leverage at the financial break-even level of output?
Consider a project with the following data:
accounting break-even quantity=17,000 units;
cash break-even quantity=12,000 units;
life=five years;
fixed costs=$130,000;
variable costs=$23 per unit;
required return=16 percent.
Ignoring the effect of taxes, find the financial break-even quanity