Final answer:
The accounting and cash break-even points are the levels of output where revenues equal explicit costs, and operating cash inflows match outflows, respectively. Both can be calculated from the provided information, assuming all costs are cash costs and there are no taxes or non-cash expenses involved. Additional data such as fixed and variable costs, and the selling price per unit is needed for a precise calculation.
Step-by-step explanation:
To calculate the accounting break-even point, we must determine the level of output at which total revenues are equal to total explicit costs. Based on the provided information where the revenues are $200,000 and the explicit costs are $85,000, we subtract explicit costs from revenues to find the accounting profit, which is $115,000. However, since the accounting break-even point is where the profit is zero, we must set the revenues equal to the explicit costs to find the break-even volume.
The cash break-even point, on the other hand, excludes non-cash expenses such as depreciation from the calculation. It's essentially the point at which a business has enough cash inflow to cover its operating cash outflows, thus ignoring any non-cash expenses. Assuming the explicit costs given are only cash costs, the cash break-even point would be the same as the accounting break-even point in this case, since no tax effects or non-cash expenses have been mentioned.
It should be noted that to calculate these break-even points accurately, we would need additional information like fixed costs, variable costs, and the selling price per unit. Without these, we cannot compute the exact break-even volume.