Question

Consider each of the following cases:

  

Case	Accounting Break-Even	Unit Price	Unit Variable Cost	Fixed Costs	Depreciation
1	117,400	$ 44	$ 31	$ 710,000	?
2	128,000	?	46	2,500,000	$ 1,250,000
3	6,404	101	?	161,000	100,000

  

Required:

(a)	Find the depreciation for Case 1. (Do not round your intermediate calculations.)
	(Click to select)  840,686  775,390  54,615  857,010  816,200

   

(b)	Find the unit price for Case 2. (Do not round your intermediate calculations.)
	(Click to select)  75.3  71.53  528,050.6  504,048.3  65.53

  

(c)	Find the unit variable cost for Case 3. (Do not round your intermediate calculations.)
	(Click to select)  54.22  66.27  126.14  63.26  60.24

rev: 09_18_2012

Answer 1

Answer to a

At Accounting Break Even Units Sales - Variable Cost - Fixed Cost - Depriciation = 0

Therefore we have ($ 44 - $ 31) x 117400 units - $ 710000 - Depriciation = 0

Depriciation = $ 816200

Answer to b

Now Accounting Break Even Units Sales - Variable Cost - Fixed Cost - Depriciation = 0

Therefore we have (Sales price - $46) x  128000 Units - $ 2500000 - $ 1250000 = 0

Sales price = (3750000 + 5888000) / 128000

Sales price = $ 75.3

Answer to c

Accounting Break Even Units Sales - Variable Cost - Fixed Cost - Depriciation = 0

Therefore we have ($ 101 - Variable Cost ) x  6404 Units - $ 161000 - $ 100000= 0

Variable Cost = (646804 -  261000) / 6404

Variable Cost = $ 60.24