The Motor Works is considering an expansion project with estimated annual fixed costs of $71,000, depreciation of $38,500, variable costs per unit of $17.90 and an estimated sales price of $28 per unit. How many units must the firm sell to break-even on a cash basis?
A)6,521 units
B)7,030 units
C)7,510 units
D)9,667 units
E)10,842 units

Question

Quizplus · Accepted Answer

Q_{cash break-even} = $71,000/($28 - $17.90) = 7,030

The Motor Works Is Considering an Expansion Project with Estimated