From the information below,calculate the accounting break-even point.
Initial investment: $2,000
Fixed costs are $2,000 per year
Variable costs: $68 per unit
Depreciation: $300 per year
Price: $25 per unit
Discount rate: 10%
Project life: 4 years
Tax rate: 34%
A) 88 units per year
B) 89 units per year
C) 92 units per year
D) 135 units per year
E) 136 units per year

Question

Quizplus · Accepted Answer

The formula to calculate the accounting break-even point is as follows:

Accounting Break-Even Point = (Fixed Costs + Depreciation)/ (Price - Variable Costs)

Substituting the given values in the formula, we get:

Accounting Break-Even Point = ($2,000 + $300)/ ($25 - $68) = 136

Therefore, the accounting break-even point is 136 units per year. Option E is the closest to this value, and hence, it is the correct answer.

From the Information Below,calculate the Accounting Break-Even Point