Question

in each of the following cases, find the unknown variable. Ignore taxes. (Do not round intermediate calculations and enter your answers rounded to the nearest whole number, e.g., 32.) Depreciation Accounting Break-Even 121,000 322,000 13,000 Unit Price $ Unit Variable Cost $ 44 54 Fixed Costs $ 950,000 5,400,000 420,000 54 1,040,000 100,000

Answer 1

(a)          
Unit price =   $54      
Variable cost=   44      
Accounting break even quantity =   121000      
Fixed costs =   950000      
          
Break even quantity = (Fixed costs+Depreciation)/(Unit price - Variable cost)          
121000=(950000+Depreciation)/(54-44)          
1,210,000.00   =950000+Depreciation      
Depreciation=   $260,000.00      
          
(b)          
Variable cost=   54      
Accounting break even quantity =   322000      
Fixed costs =   5400000      
Depreciation=   1040000

Break even quantity = (Fixed costs+Depreciation)/(Unit price - Variable cost)          
322000=(5400000+1040000)/(Unit price-54)          
unit price - 54=   =(6440000/322000)      
Unit price   $20.00   +54=   $74.00
          
So unit price is   $74.00      
          
          
(c)          
Unit price =   60      
Accounting break even quantity =   13000      
Fixed costs =   420000      
Depreciation=   100000      

Break even quantity = (Fixed costs+Depreciation)/(Unit price - Variable cost)          
13000=(420000+100000)/(60--VC)          
60-VC=   =(520000/13000)      
VC= 60-   $40.00   $20.00  
          
So Variable cost per unit is   $20.00      
          

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