# Managerial accounting : Calculation of cash break-even quantity

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```					              Sub: Accounts                                                          Topic: Managerial Accounting

Question:
Calculation of cash break-even quantity and financial break-even quantity.

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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
quantity

Solution:
Unit p
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Description: Calculation of cash break-even quantity and financial break-even quantity. : A project has the following estimated data: price=\$68 per unit; variable costs=\$41 per unit: fixed costs=\$8,000; required return=15 percent;
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