Requirement 1: (a) Calculate the cash break-even point of Case 1. (Do not round

Question

Requirement 1:

(a) Calculate the cash break-even point of Case 1. (Do not round your intermediate calculations.)

(b) Calculate the accounting break-even point of Case 1. (Do not round your intermediate calculations.)

Requirement 2:

(a) Calculate the cash break-even point of Case 2. (Do not round your intermediate calculations.)

(b) Calculate the accounting break-even point of Case 2. (Do not round your intermediate calculations.)

Requirement 3:

(a) Calculate the cash break-even point of Case 3. (Do not round your intermediate calculations.)

(b) Calculate the accounting break-even point of Case 3. (Do not round your intermediate calculations.)

Explanation / Answer

Case 1:

Cash break even point = 7000x = 4830x + 11000000

Hence Break even point =x = 11000000/2170 = 5069.12 = 5070 Units

Accounting Break Even point = (11000000+4510000)/2170 =7147.47 = 7148 Units

Case 2:

Cash Break-even = 11000/8.82 = 1247.16 = 1248 Units

Accounting Break-even = (11000+25300)/8.82 = 4115.64 Units = 4116 Units

Case 3:

Cash Break even = 800/6.2 = 129.03 = 130 Units

Accounting Break even =(800+650)/6.2 = 219.35 = 220 Units

Since units cannot be produced in fractions we have to round it to the next possible round number

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