What is the accounting break-even point? Price = $100 per unit; variable cost = $24 per unit; fixed cost = $40,000 per year; depreciation = $10,000 per year. Assume a discount rate of 10%, project initial outlay of $100,000, project life of 10 years, and ignore taxes.
A) 527 units
B) 624 units
C) 658 units
D) 925 units
E) 1,130 units

Question

Quizplus · Accepted Answer

The accounting break-even point is calculated by dividing the sum of fixed costs and depreciation by the contribution margin per unit (price - variable cost). Here, it is ($40,000 + $10,000) / ($100 - $24) = 658 units.

What Is the Accounting Break-Even Point? Price = $100 Per