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A project has the following estimated data: price = $89 per unit; variable costs = $35.60 per unit; fixed costs = $5,900; required return = 14 percent; initial investment = $10,000; life = three years. Ignore the effect of taxes.

a. What is the accounting break-even quantity?
110
173
208
190

b. What is the cash break-even quantity?
110
173
105
88
99

c. What is the financial break-even quantity?
191
229
210
172
153

d. What is the degree of operating leverage at the financial break-even level of output?
2.3698
2.2491
1.9896
1.4705

User Mistalee
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1 Answer

2 votes
The correct answer is C!!
User Luke Forder
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8.2k points

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