Consider the following cases: Ignore any tax effects in calculating the cash bre

Question

Consider the following cases: Ignore any tax effects in calculating the cash break-even. Requirement 1: (a)Calculate the cash break-even point of Case 1 Multiple Choice: 4,633 / 6,353 / 904 / 4,412 /4,191 (b)Calculate the accounting break-even point of Case 1 Multiple Choice: 6,035 / 1,301 /4,412 / 6,353 / 6,671 Requirement 2: (a)Calculate the cash break-even point of Case 2 Multiple Choice: 2,544 / 921 / 193 / 833 / 877 (b)Calculate the accounting break-even point of Case 2 Multiple Choice: 2,671 / 2,544 / 558 / 877 / 2,417 Requirement 3: (a)Calculate the cash break-even point of Case 3 Multiple Choice: 122 / 136 / 150 / 60 / 244 b)Calculate the accounting break-even point of Case 3 Multiple Choice: 268 / 136 / 220 / 244 / 108

Explanation / Answer

1) Cash break even = Fixed cost / (unit price - unit variable cost)

                                 = 12,000,000 / (8,000 - 5,280) = 4411.7 = 4,412

   Accounting breakeven = (Fixed cost+ depreciation) / (unit price - unit variable cost)

                                 = (12,000,000 + 5280000) / (8,000 - 5,280) = 6,353

2) Cash break even = Fixed cost / (unit price - unit variable cost)

                                 = 12,000 / (38 - 24.32) = 4411.7 = 877

   Accounting breakeven = (Fixed cost+ depreciation) / (unit price - unit variable cost)

                                 = (12,000 + 22800) / (38 - 24.32) = 2,544

3) Cash break even = Fixed cost / (unit price - unit variable cost)

                                 = 1,000 / (12 - 4.62) = 4411.7 = 136

   Accounting breakeven = (Fixed cost+ depreciation) / (unit price - unit variable cost)

                                 = (1,000 + 800) / (12 - 4.62) = 244

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