1.

A project has the following estimated data: price = $53 per unit; variable costs = $19.61 per unit; fixed costs = $5,200; required return = 11 percent; initial investment = $12,000; life = six years. Ignore the effect of taxes.

Required:

(a)	What is the accounting break-even quantity? (Do not round your intermediate calculations.)
	(Click to select)216 205 238 156 259

(b)	What is the cash break-even quantity? (Do not round your intermediate calculations.)
	(Click to select)148 216 156 125 140

(c)	What is the financial break-even quantity? (Do not round your intermediate calculations.)
	(Click to select)217 193 265 289 241

(d)	What is the degree of operating leverage at the financial break-even level of output? (Do not round your intermediate calculations.)
	(Click to select)1.0818 1.3137 2.0091 2.8332 1.7773

2.

At an output level of 48,000 units, you calculate that the degree of operating leverage is 1.60. If output rises to 73,920 units, what will the percentage change in operating cash flow be? (Do not round your intermediate calculations.)

rev: 09_18_2012

86.40%

56.10%

90.72%

88.99%

82.08%

3.

The contribution margin per unit is equal to the:

Sales price per unit minus the total costs per unit.

Variable cost per unit minus the fixed cost per unit.

Sales price per unit minus the variable cost per unit.

Pretax profit per unit.

Aftertax profit per unit.

5.

Wilsons Market is reviewing a project with sales of 6,200 units plus or minus 2 percent at a sales price of $29 plus or minus 1 percent per unit. The expected variable cost per unit is $11 plus or minus 3 percent and the expected fixed costs are $87,000plus or minus 1 percent. The depreciation expense is $68,000 and the tax rate is 35 percent. What is the net income under the worst-case scenario?

-$8,578.42

-$32,674.93

$15,846.67

$28,704.11

$4,696.18