A project has a contribution margin of €5,projected fixed costs of €12,000,projected variable cost per unit of €12,and a projected present value break-even point of 5,000 units.What is the operating cash flow at this level of output?

Question

Quizplus · Accepted Answer

The operating cash flow at the break-even point is equal to the fixed costs, which is €12,000. Since the contribution margin per unit is €5 and the break-even point is 5,000 units, the total contribution margin is 5,000 units * €5 = €25,000. Subtracting the fixed costs (€12,000) from the total contribution margin gives an operating cash flow of €13,000.

A Project Has a Contribution Margin of €5,projected Fixed Costs