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A firm has fixed costs of $1.2 million and depreciation of $1 million. At a sales level of $3.6 million, the variable costs of $2.304 million. What is the accounting break-even level of sales

Sagot :

Answer: 6.11 million

Explanation:

The accounting break-even level of sales will be calculated as:

= (depreciation + fixed costs) / (1 - (variable costs/sales))

= (1.2million + 1million) / [1 - (2.304million / 3.6million))

= 2.2 million / (1 - 0.64)

= 2.2million /0.36

= 6.11 million

Therefore, the the accounting break-even level of sales is $6.11 million.

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