Answer:
Hence,
Accounting Break even Cash break even
Case 1 $13,094 $10,394
Case 2 $6,870 $1,387
Case 3 $189 $15
Explanation:
The formula to compute accounting break even and cash break even points is shown below:
Accounting Break even = (Fixed cost + depreciation) ÷ (unit price - unit variable cost )
Cash break even = Fixed cost ÷ (unit price - unit variable cost )
Case 1:
Accounting Break even = ($7,120,000 + 1,850,000) ÷ (3,340 - 2655)
= 13,094
Cash break even = ($7,120,000) ÷ (3,340 - 2655)
= 10,394
Case 2:
Accounting Break even = ($86,000 + $340,000) ÷ (141 - 79)
= 6870
Cash break even = ($86,000) ÷ (62)
= 1,387
Case 3:
Accounting Break even = ($3,600 + 760) ÷ (30 - 7)
= 189
Cash break even = ($3,600) ÷ (30 - 7)
= 156
Hence,
Accounting Break even Cash break even
Case 1 $13,094 $10,394
Case 2 $6,870 $1,387
Case 3 $189 $156