A Project Has an Accounting Breakeven Point of 3,800 Units

question 38

Multiple Choice

A project has an accounting breakeven point of 3,800 units.The fixed costs are $3,208,and the projected variable cost per unit is $16.42.The project requires an initial investment in fixed assets of $840 that will be depreciated straight-line to zero over the 4-year life of the project.What is the projected sales price given a zero tax rate?

• A)$14.67
• B)$21.08
• C)$16.82
• D)$20.08
• E)$17.32

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Definitions:

Diseconomies of Scale

The phenomenon where production costs increase as a firm's output expands, leading to inefficiencies.

Long-Run Average Total Cost

The average cost per unit of output when all factors of production, including capital, are variable in the long term.

Slope

In mathematics, the slope of a line is a number that describes both the direction and the steepness of the line.

Average Total Cost

Total production expenses per unit of output, calculated by dividing the production costs by the quantity produced.