A project has the following estimated data: price = $80 per unit; variable costs = $55 per unit; ﬁxed costs = $25,000; required return = 15%; initial investment = $44,000; life = ﬁve years. What is the
Accounting break-even quantity?
A) 1,000 units.
B) 1,352 units.
C) 1,525 units
D) 1,775 units
E) 1,950 units

Question

Quizplus · Accepted Answer

To calculate the accounting break-even quantity, we need to find the number of units needed to cover the fixed costs and variable costs:

Accounting break-even quantity = (Fixed costs) / (Price - Variable costs)

Plugging in the given values, we get:

Accounting break-even quantity = ($25,000) / ($80 - $55)

Accounting break-even quantity = 1,352 units

Therefore, the best choice is B, because it is the only option that correctly identifies the accounting break-even quantity.

A Project Has the Following Estimated Data: Price = $80