From the Information Below,calculate the Accounting Break-Even Point

question 91

Multiple Choice

From the information below,calculate the accounting break-even point.
Initial investment: $2,000
Fixed costs are $2,000 per year
Variable costs: $68 per unit
Depreciation: $300 per year
Price: $25 per unit
Discount rate: 10%
Project life: 4 years
Tax rate: 34%

• A) 88 units per year
• B) 89 units per year
• C) 92 units per year
• D) 135 units per year
• E) 136 units per year

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Definitions:

Income Tax Expense

The cost incurred by a business or individual due to income tax, reflected as an expense on the income statement.

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or long-term assets.

Straight-Line Depreciation

A technique of spreading the expense of an asset evenly across its lifespan to calculate depreciation.

Income Tax Expense

The amount of money a company is required to pay to the government based on its net income, according to the applicable income tax rates.