Kurt Neal and Son is considering a project with a discounted payback just equal to the project's life.The projections include a sales price of $12,variable cost per unit of $8.50,and fixed costs of $5,500.The operating cash flow is $7,200.What is the break-even quantity?

Question

Quizplus · Accepted Answer

The break-even quantity is calculated by dividing the fixed costs by the contribution margin per unit (sales price - variable cost per unit). Here, the contribution margin is $12 - $8.50 = $3.50. The break-even quantity is $5,500 / $3.50 = 1,571.43 units. However, the operating cash flow of $7,200 suggests additional units are needed to cover this, leading to a total of 3,629 units.

Kurt Neal and Son Is Considering a Project with a Discounted