Question
Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,200 per year, and variable costs are $60 per
Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed costs are $1,200 per year, and variable costs are $60 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.
| a. | What is the accounting break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| Acounting break-even level of sales | units |
| b. | What is the NPV break-even level of sales if the firm pays no taxes? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| NPV break-even level of sales | units |
| c. | What is the accounting break-even level of sales if the firms tax rate is 35%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| Acounting break-even level of sales | units |
| d. | What is the NPV break-even level of sales if the firms tax rate is 35%? (Do not round intermediate calculations. Round your answer to the nearest whole number.) |
| NPV break-even level of sales | units |
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Performance Auditing A Measurement Approach
Authors: Ronell B. Raaum CGAP CGFM, Stephen L. Morgan CIA CGAP CFE CGFM
2nd Edition
0894136607, 9780894136603
