Spencer Tools would like to offer a special product to its best customers.However,the firm wants to limit its maximum potential loss on this product to the firm's initial investment in the project.The fixed costs are estimated at $21,000,the depreciation expense is $11,000,and the contribution margin per unit is $12.50.What is the minimum number of units the firm should pre-sell to ensure its potential loss does not exceed the desired level?
A)1,220 units
B)1,680 units
C)2,215 units
D)2,560 units
E)2,750 units

Question

Quizplus · Accepted Answer

Cash break-even point = $21,000/$12.50 = 1,680 units

Spencer Tools Would Like to Offer a Special Product to Its