The accounting break-even production quantityfor a project is 11,640 units. The

Question

The accounting break-even production quantityfor a project is 11,640 units. The fixed costs are $216,000 and thecontribution margin per unit is $28. The fixed assets required forthe project will be depreciated on straight-line basis to zero overthe project's 5-year life. What is the amount of fixed assetsrequired for this project? Choose one answer. a.$325,920 b.$549,600 c.$748,500 d.$1,080,000 e.$1,629,600 The accounting break-even production quantityfor a project is 11,640 units. The fixed costs are $216,000 and thecontribution margin per unit is $28. The fixed assets required forthe project will be depreciated on straight-line basis to zero overthe project's 5-year life. What is the amount of fixed assetsrequired for this project? Choose one answer. a.$325,920 b.$549,600 c.$748,500 d.$1,080,000 e.$1,629,600 Choose one answer. a.$325,920 b.$549,600 c.$748,500 d.$1,080,000 e.$1,629,600

Explanation / Answer

Total Rev = Cont pu x No of units = 28*11640 = 325920 Total Rev - Fixed cost = Operating profit = 325,920 - 216,000= 109,920
At BEP Net profit = Operating profit -Depreciation = 0 So at BEP, Operating profit = Depreciation = 109,920 As Depreciat ion is Straight line for 5 years, Fxed asset value = 5*Depreciation pa = 5*109920 = 549,600
So (b) = $549,600 is answer

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