12.10 Break-even: Calculate the accounting operating profit break-even point and

Question

12.10 Break-even: Calculate the accounting operating profit break-even point and pretax operating cash flow break-even point for each of the production choices outlined below. Choice Price Unit VC FC D&A A $250.00 $160.00 $15,000.00 $3,000.00 B $55.00 $10.00 $1,100.00 $200.00 C $10.00 $1.50 $100.00 $100.00 12.10 Break-even: Calculate the accounting operating profit break-even point and pretax operating cash flow break-even point for each of the production choices outlined below. Choice Price Unit VC FC D&A A $250.00 $160.00 $15,000.00 $3,000.00 B $55.00 $10.00 $1,100.00 $200.00 C $10.00 $1.50 $100.00 $100.00

Explanation / Answer

Accounting Operating Break Even Point = (FIxed Cost + Depreciation & amortisation)/( Price/unit - Variable cost/Unit)
Pretax Operating Break even Point = ( Fixed Cost)/( Price/unit - Variable cost/Unit)
Accounting Operating Break Even Point for
A) (15000+3000)/(250-160) = 200
B) (1100 + 200)/(55 -10) = 28.88
C) (100 + 100)/( 10 -1.50) = 23.53

Pretax Operating Break Even Point for
A) (15000)/(250-160) = 166.67
B) (1100 )/(55 -10) = 24.44
C) (100 )/( 10 -1.50) = 11.76

Best of Luck. God Bless

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