Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2. Smith Brothers has a choice of two projects. Project A has annual fixed costs of $1,500,000 while project B has annual fixed costs of
2. Smith Brothers has a choice of two projects. Project A has annual fixed costs of $1,500,000 while project B has annual fixed costs of $3.5m. Project A has depreciation and amortization of $400,000 and project B has depreciation and amortisation of $750,000. The possible projects are for the sale of computer keyboards. These keyboards will sell for $50 each. The variable costs for project A are $32 and $21 for project B. The EBIT of project A is $350,000 and the EBITDA of Project B is $3.2m. Calculate: C. a. Calculate the cash flow cross over level of unit sales b. Calculate the accounting cross over level of unit sales Calculate the cash flow DOL for project A d. Calculate the accounting DOL for project A e. Calculate the cash flow DOL for project B f. Calculate the accounting DOL for project B g. Calculate cash flow break-even for project A h. Calculate cash flow break-even for project B i. Calculate accounting break-even for project B 2. Smith Brothers has a choice of two projects. Project A has annual fixed costs of $1,500,000 while project B has annual fixed costs of $3.5m. Project A has depreciation and amortization of $400,000 and project B has depreciation and amortisation of $750,000. The possible projects are for the sale of computer keyboards. These keyboards will sell for $50 each. The variable costs for project A are $32 and $21 for project B. The EBIT of project A is $350,000 and the EBITDA of Project B is $3.2m. Calculate: C. a. Calculate the cash flow cross over level of unit sales b. Calculate the accounting cross over level of unit sales Calculate the cash flow DOL for project A d. Calculate the accounting DOL for project A e. Calculate the cash flow DOL for project B f. Calculate the accounting DOL for project B g. Calculate cash flow break-even for project A h. Calculate cash flow break-even for project B i. Calculate accounting break-even for project B
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started