Question

In each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Case Unit Price Unit Variable Cost Fixed Costs Depreciation 1 $ 2,980 $ 2,135 $ 8,100,000 $ 3,100,000 2 46 41 185,000 183,000 3 9 3 2,770 1,050

Answer 1

accounting break even =( fixed cost + depreciation) / (unit price - unit variable cost).

cash break even point = fixed cost / (unit price - unit variable cost)

case	accounting break even	cash break even
1	(8100000+3100000)/(2980-2135)=>11,200,000/845 =>13,254.44 units	8,100,000/(2980-2135)=>9,585.80 units
2	(185,000+183000)/ (46-41)=>368,000/5 =>73,600 units	185,000/ (46-41) =>37,000 units
3	(2770+1050)/(9-3)=>3,820/6 =>636.67 units	2770/(9-3)=>461.67 units