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

question 252

Multiple Choice

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

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business such as rent, salaries, and utilities.

Revenues

Income generated from normal business operations and includes discounts and deductions for returned merchandise.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating costs, from its total revenues.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and salaries, excluding direct production costs.