In each of the following cases, calculate the accounting break-even and the cash

Question

In each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break- even.

    Unit Price     Unit Variable Cost           Fixed Costs            Depreciation

a.   $3,020                $2,275                          $9,000,000           $3,100,000

b.         46                         41                                 73,000                 150,000

c.         11                            4                                  1,700                        930

Explanation / Answer

Solution:

a. Sales 3,020 Less: Variable cost 2,275 Contribution margin 745 P/V Ratio = Contribution / sales * 100 P/V Ratio = $ 745 / $ 3,020 * 100 24.67% Break even point = Fixed cost / Pv ratio Break even point =        49,049,664.43 Fixed cost = $ 9,000,000 + $ 3,100,000 12,100,000 Cash Breakeven = Cash fixed cost / Pv ratio Fixed cost 12,100,000 Less: Depreciation 3,100,000 Cash fixed cost 15,200,000 Cash Breakeven =        61,616,107.38

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.