Question

Bobcat Industrial Supply is considering a new project with estimated depreciation of $46,000, fixed costs of $39,000, and total sales of $487,000. The variable costs per unit are estimated at $21.00. What is the accounting break-even level of production?

Answer 1

Answer:

19,142.86 unit

Explanation:

Let the number of units be X

We know that,

Profit = Total Sales - Variable cost per unit × number of units - fixed cost - estimated depreciation

$0 = $487,000 - $21X - $39,000 - $46,000

$0 = $402,000 - $21 X

So, the X would be

= $402,000 ÷ $21 per unit÷

= 19,142.86 units

In a break even point, the firm has no profit or no loss so we assume the profit is $0