The Covington Engine Company is considering opening a new plant facility to build truck engines.
As part of a detailed analysis of the proposed facility, Covington's management wants some information on the cash breakeven point.
Fixed costs for the facility are expected to be $6 million a year, including depreciation expenses of $800,000 a year. The engines' sales price is expected to be $7,000 per unit, and the variable cost is expected to be $3,000 per unit.
Calculate the expected annual cash breakeven point and the expected annual cash breakeven sales.