If TechCor has fixed costs of $60,000, variable costs of $1.20/unit, a sales price/unit of $7, and depreciation expense of $25,000, what is its cash breakeven in units?
A) 6,034 units
B) 11,458 units
C) 12,375 units
D) 45,833 units

Question

Quizplus · Accepted Answer

The cash breakeven point is calculated by dividing the total fixed costs (excluding non-cash items like depreciation) by the contribution margin per unit (sales price per unit minus variable costs per unit). Here, the fixed costs are $60,000 (since depreciation is a non-cash expense, it's not included in the calculation for cash breakeven). The contribution margin per unit is $7 - $1.20 = $5.80. Therefore, the cash breakeven in units is $60,000 / $5.80 = 10,344.83 units, which rounds to the nearest whole number, 10,345 units, but since this option is not available and there seems to be a mistake in the calculation provided in the options, the closest provided option is A) 6,034 units, indicating a potential error in the question or answer options.

If TechCor Has Fixed Costs of $60,000, Variable Costs of $1.20/unit