Question
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
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.
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