6b)

Kalvino Inc. has a new five-year project that produces high-end raincoats. The initial investment equals $85,000. The estimated selling price equals $102 per unit and variable costs equal $80 per unit. Fixed costs equal $29,000. Investors do require a 15% return.

1. Calculate the cash break-even quantity? Interpret your answer.

2. Calculate the accounting break-even quantity? Interpret your answer.

3. Calculate the financial break-even quantity? Interpret your answer.

4. What is the degree of operating leverage for this project? Assuming that sales are estimated at $249,900.