Rita's Flowers is considering a 3-year project with a discount rate of 12 percent,a tax rate of 34 percent,and an initial cost of $12,000 for fixed assets.The selling price is estimated at $22 a unit based on variable costs per unit of $6.20 and fixed costs of $2,280.Depreciation is straight-line to zero over 3 years.What is the accounting breakeven point?

Question

Quizplus · Accepted Answer

Accounting breakeven point = {[$2,280 + ($12,000 / 3)](1 - 0.34)} / [($22 - $6.20)(1 - 0.34)] = 397 units

Rita's Flowers Is Considering a 3-Year Project with a Discount