BASIC INFORMATION: a Three-Year Project Will Cost $60,000 to Construct

question 219

Multiple Choice

BASIC INFORMATION: A three-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the three-year life. The price per unit sold is $20 and the variable cost per
Unit sold is $10. Fixed costs are $30,000 per year.
Using the BASIC INFORMATION, compute the cash break-even point. (Ignore taxes.)

• A) 1,800
• B) 3,000
• C) 4,200
• D) 5,000
• E) 7,000

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Definitions:

Minority Passive Investments

Investments in which the investor holds a non-controlling stake and does not actively participate in management.

Trading Securities

Securities that are purchased by a company not for long-term investment but rather with the intent to trade for short-term gains.

Available-For-Sale Securities

Financial assets that are intended to be sold before their maturity but are not classified as trading securities.

Investment Account

A financial account held at a financial institution or brokerage that is used to hold securities, stocks, bonds, mutual funds, and other investments.