Ryan Industries Is Considering a Project with a Discounted Payback

question 89

Multiple Choice

Ryan Industries is considering a project with a discounted payback just equal to the project's life. The projections include a sales price of $12,variable cost per unit of $9,and fixed costs of $5,000. The operating cash flow is $8,000. What is the break-even quantity?

• A) 1,900 units
• B) 2,679 units
• C) 3,250 units
• D) 4,000 units
• E) 4,333 units

---

Definitions:

Unit Contribution Margin

This is the difference between the selling price per unit and the variable cost per unit. It indicates how much each unit sold contributes to fixed costs and profit.

Fixed Expenses

Constant costs incurred by a business, irrespective of the level of goods or services produced.

CVP Graph

A visual representation of the Cost-Volume-Profit analysis that illustrates the relationship between total costs, total sales, and the number of units produced or sold.

Break-even Point

The point where a business's total costs and total revenues are the same, leading to neither a profit nor a loss.