Question

The accounting break-even production quantity for a project is 5,850 units. the fixed costs are $27,400 and the contribution margin is $7. what is the projected depreciation expense? $0 $12,836 $12,914 $13,224 $13,550

Answer 1

To find the projected depreciation:
Take the quantity for the project in units and multiple it by the contribution margin. After that you will subtract the fixed costs and you are left with the projected depreciation expense.

Projected depreciation = (5,850)(7) - 27,400
Projected depreciation = 40,950 - 27,400
Projected depreciation = 13,550