Sub: Accounts Topic: Managerial Accounting
Calculation of cash break-even quantity and financial break-even quantity.
ClassOf1 provides expert guidance to College, Graduate, and High school students on homework and assignment problems in
Math, Sciences, Finance, Marketing, Statistics, Economics, Engineering, and many other subjects.
In each of the following cases, find the unknown variable:
Accounting Break-Even Unit Price Unit Variable Cost Fixed Costs Depreciation
127,500 $41 $30 $820,000 ?
135,000 ? 43 3,200,000 $1,150,000
5,478 98 ? 160,000 105,000
A project has the following estimated data: price=$68 per unit; variable costs=$41 per unit:
fixed costs=$8,000; required return=15 percent; initial investment=$12,000; life=four years.
Ignoring the effect of taxes, what is the accounting break-even quantity? The cash break-even
quantity? The financial break-even quantity? What is the degree of operating leverage at the
financial break-even level of output?
Consider a project with the following data: accounting break-even quantity=17,000 units; cash
break-even quantity=12,000 units; life=five years; fixed costs=$130,000; variable costs=$23 per
unit; required return=16 percent. Ignoring the effect of taxes, find the financial break-even