In each of the following cases, calculate the accounting break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. (Round your answers to 2 decimal places. (e.g., 32.16))

In each of the following cases, calculate the accounting  break-even and the cash break-even points. Ignore any tax effects in calculating the cash break-even. (Round your answers to 2 decimal places. (e.g., 32.16))

 

Case	Unit Price			Unit Variable Cost			Fixed Costs			Depreciation
1	$	3,370		$	2,675		$	8,120,000		$	3,060,000
2		146			81			78,000			350,000
3		31			7			3,700			860

Case	Accounting break-even	Cash break-even
1
2
3

Explanation:

The cash break-even equation is:

QC = FC/(P – v)

And the accounting break-even equation is:

QA = (FC + D)/(P – v)

 

Using these equations, we find the following cash and accounting break-even points:

 

a.	QC = $8,120,000/($3,370 – 2,675)	QA = ($8,120,000 + 3,060,000)/($3,370 – 2,675)
	QC = 11,683.45	QA = 16,086.33

 

b.	QC = $78,000/($146 – 81)	QA = ($78,000 + 350,000)/($146 – 81)
	QC = 1,200.00	QA = 6,584.62

c.	QC = $3,700/($31 – 7)	QA = ($3,700 + 860)/($31 – 7)
	QC = 154.17	QA = 190.00