Laslo Co has recently been approached about the prospect of purchasing a large construction crane. The crane rents for $500 an hour but operator, fuel insurance and miscellaneous expenses run $200 an hour when the crane is in use. The company owner estimates that it will cost $1.000 a month to store and maintain the crane and the annual depreciation expense in $50.000.

1. Calculate the accounting break-even number of annual rental hours needed to produce zero operating earning from the crane (before taxes)
2. Calculate the cash break-even point. If we ignore non-cash expenses such as depreciation in the break-even calculation, how many hours must the crane be rented in order to break even on a cash basis?
3. Why do we have two different break-even point?