Wexford Industrial Supply is considering a new project with estimated depreciation of $38,200, fixed costs of $84,600, and total sales of $211,000 at the accounting break-even level. The variable costs per unit are estimated at $9.64. What is the accounting break-even level of production?
A) 6,871 units
B) 9,333 units
C) 10,415 units
D) 9,149 units
E) 7,248 units

Question

Quizplus · Accepted Answer

The accounting break-even point can be calculated using the formula:

Accounting break-even point = (Total fixed costs + Depreciation) ÷ (Price per unit - Variable costs per unit)

Plugging in the given values:

Accounting break-even point = ($84,600 + $38,200) ÷ ($211,000 ÷ X - $9.64)
where X is the number of units produced and sold

Solving for X:
X = 9,149 units (rounded to nearest whole number)

Therefore, the correct answer is D.

Wexford Industrial Supply Is Considering a New Project with Estimated