Question

Homework: Homework 8 3 of 8 (0 complete) Score: 0 of 10 pts P13-9 (similar to) (Related to Checkpoint 13.4) (Break-even analysis) Project Price per Unit Variable Cost per Unit Accounting Break-Even Point (in units) 6,270 770 1,980 1,980 $57 Fixed Costs $98,000 $501,000 $4,600 Depreciation $23,000 $99,000 $1.050 $23 $23 $15 $12,000 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? a. Calculate the missing information for each of the above projects The price per unit for Project Ais $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Ans Clear All 9 parts remaining

Answer 1

Part-1

Accounting BEP Unit= (Fixed Cost + Depreciation )/ Contributio Margin Per Unt

Project -A

Contribution per Unit = (Fixed Cost Cost + Depreciation )/BEP unit

=(98000+23000)/6270=$19.30

Price Per Unit = Contribution Margin per Unit= Variable cost per Unt

=$19.30+ $57=$76.30

Project B

Contribution per Unit = (Fixed Cost Cost + Depreciation )/BEP unit

=(501000+99000)/770=$779

Variable Cost Per Unit = Price per Unit - Contribution Margin per Unit

($1050-$779)=$271

Project C

Fixed Cost + Depreciation= (Price per Unit - Variable cost per Unit)X Accounting BEP Unit

Fixed Cost +Depreciation=(23-15)X1980

Fixed Cost + Depreciation=(8X1980)

Depreciation= 15840-4600=$11240

Project D

Fixed Cost + Depreciation= (Price per Unit - Variable cost per Unit)X Accounting BEP Unit

Fixed Cost +Depreciation=(23-5)X1980

Fixed Cost+ Depreciation= 18X1980

Fixed Cost= 35640-12000=$23640

Part-2

Project D Would be Prefer because Variable cost is very low in Project D As compare with Project C

Part-3

Cash BreakEven Point = Fixed Cost/ Contribution Margin per Unit

Project A= 98000/$19.30=5078 Unit

Project B= 501000/779=$643

Project C= 4600/8=575 Unit

Project D= $23640/18=$1313