For a particular product, Sandbarr Corporation has operating fixed costs of R30,000, of which depreciation of R15,000 is the only non-cash outlay.The unit sale price is R4.20 per unit and variable costs are R2.20 per unit.What is the operating cash breakeven point in units for Sandbarr?

Question

Quizplus · Accepted Answer

The operating cash breakeven point is calculated by dividing the cash fixed costs (total fixed costs minus non-cash depreciation) by the contribution margin per unit (sale price minus variable cost). Cash fixed costs = R30,000 - R15,000 = R15,000. Contribution margin per unit = R4.20 - R2.20 = R2.00. Breakeven point = R15,000 / R2.00 = 7,500 units.

For a Particular Product, Sandbarr Corporation Has Operating Fixed Costs