Question

We are evaluating a project that costs $848,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 62,000 units per year. Price per unit is $40, variable cost per unit is $20, and fixed costs are $625,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project.

a.
Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answer 1

The accounting break-even point is 36550

Step-by-step explanation:

total fixed cost = fixed cost + depreciation

= 625000 + 106000

= 731000

break even point = total fixed cost/contribution

= 731000/20

= 36550

Therefore, The accounting break-even point is 36550