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a) Using the information provided and results obtained above, apply formula to compute (i) Accounting Break-even (ii) Cash break-even (ignoring taxes) quantity of sales. Show
a) Using the information provided and results obtained above, apply formula to compute
(i) Accounting Break-even
(ii) Cash break-even (ignoring taxes) quantity of sales.
Show Work and properly "label" results.
b) Bonus: Using the information provided and results obtained AND Excel's "Goal Seek" function, compute
(i) Cash break-even (NOT ignoring taxes) and
(ii) Financial break-even quantity of sales.
Record the results below. Remember to properly "label" them.
GIVEN INFORMATION | |
According to best estimates: | |
Unit sales | 45,000 |
Price per unit | 140 |
Variable cost per unit | 125 |
Fixed costs per year | 186,000 |
Fixed Assets at the beginning | 640,000 |
Changes in NWC | 0 |
Project life (years) | 2 |
Depreciation -years,method | 2 |
Required return | 12% |
Income tax rate | 40% |
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