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Niece Equipment Rentals of Del Valle. Texas, has recently been approached about the prospect of purchasing a large construction crane. The crane rents for $500
Niece Equipment Rentals of Del Valle. Texas, 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 is $50,000. Given Data: Price per an hour Variable cost per hour Fixed costs Depreciation expenses per year Months in a year S500.00 S200.00 $1,000.00 $50,000.00 12 a. Calculate the accounting break-even number of annual rental hours needed to produce zero operating earnings from the crane (before taxes). Fixed costs other than depreciation per year Accounting break-even point b. Calculate the cash break-even point. If we ignore non-cash expenses such as depreciation in the break-even calculation for how many hours must the crane be rented in order to break even on a cash basis? Cash break-even point
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