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a project has a unit sales price of $13.39, a variable cost per unit of $5.48, fixed costs of $3,000, and depreciation expense of $830. ignore taxes. what is the accounting break-even quantity?

Sagot :

A project with a unit sales price of $13.39, variable cost $5.48 per unit, fixed cost $3,000, and depreciation expense of $830. The accounting break-even quantity of a project is 485.

Break-even quantity or break-even point is the level of output where a company's production cost equal its revenue, hence gains neither profit or loss. Break-even point is calculaetd by dividing the fixed costs of production by the contribution margin. Break-even point could be formulated as:

Break-even point:       Fixed costs      

                              Contribution Margin

Contribution margin is the different between selling price and variable costs per unit produt. Hence, we could rewrite the break-even point formula into:

Break-even point:            Fixed costs              

                              Selling price - variable costs

From the case, we have some informations:

Selling price = $13.39 per unit

Variable cost = $5.48 per unit

Fixed costs = $3,000

Depreciation expense = $830

Using the informations provided above, we find that the break-even quantity for a project is:

Break-even point:           Fixed costs              

                             Selling price - variable cost

Break-even point:  ($3,000 + $830)    

                                ($13.39 - $5.48)

Break-even point = 484.2 units

Break-even point ≈ 485 units

Take a look at the amount of fixed costs calculated above. We have to include the depreciation expense because it is also counted as a form of fixed costs.

Learn more about Break-even Point here: https://brainly.com/13450992

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