Question
Project Accounting Break-Even Point (in units) Price per Unit Variable Cost per Unit Fixed Costs Depreciation A 6,300 $54 $102,000 $27,000 B 770 $1,020 $505,000
| Project | Accounting Break-Even Point (in units) | Price per Unit | Variable Cost per Unit | Fixed Costs | Depreciation | ||
|---|---|---|---|---|---|---|---|
| A | 6,300 | $54 | $102,000 | $27,000 | |||
| B | 770 | $1,020 | $505,000 | $97,000 | |||
| C | 1,950 | $24 | $15 | $4,700 | |||
| D | 1,950 | $24 | $ 8 | $13,000 | |||
a.Calculate the missing information for each of the above projects.
b.Note that Projects C and D share the same accounting break-even. If sales are above the break-even point, which project would you prefer? Explain why.
c.Calculate the cash break-even for each of the above projects. What do the differences in accounting and cash break-even tell you about the four projects?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Guide To Finance Theory And Application Portfolio Mathematics
Authors: Professional Risk Managers' International Association (PRMIA)
1st Edition
0071731814
