Question
#43 Suppose it has been determined that the cash breakeven point is a a production level of 5,000 units per year, the accounting breakeven point
#43
Suppose it has been determined that the cash breakeven point is a a production level of 5,000 units per year, the accounting breakeven point is a production level of 8,000 units per year, and the financial breakeven point is a production level of 12, 000 units per year. If the production level is expected to remain at 6,500 units per year for the balance of the life of a project, what would be the proper course of action to take?
a. | Shut down the project because it is operating below the accounting breakeven point. | |
b. | Shut down the project because it is operating below the financial breakeven point. | |
c. | Continue operating the project because it is above the cash breakeven point. |
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