A project has a contribution margin of $6, projected ﬁxed costs of $14,000, projected variable cost per unit of $14, and a projected ﬁnancial break-even point of 6,000 units. What is the operating
Cash ﬂow at this level of output?
A) $22,000
B) $34,000
C) $46,000
D) $62,000
E) $70,000

Question

Quizplus · Accepted Answer

The operating cash flow at the financial break-even point is equal to the contribution margin per unit multiplied by the number of units sold minus the fixed costs. Here, the contribution margin is $6, and the break-even point is 6,000 units, so the operating cash flow is (6,000 units * $6) - $14,000 = $22,000.

A Project Has a Contribution Margin of $6, Projected ﬁXed