(Related to Checkpoint 13.4) (Using break-even analysis) Mayborn Enterprises, LLC runs a number of sporting goods businesses and is currently analyzing a new T-shirt printing business. Specifically, the company is evaluating the feasibility of this business based on its estimates of the unit sales, price per unit, variable cost per unit, and fixed costs. The company's initial estimates of annual sales and other critical variables are shown here: E- a. Calculate the accounting and cash break-even annual sales volume in units. b. Bill Mayborn is the grandson of the founder of the company and is currently enrolled in his junior year at the local state university. After reviewing the accounting break-even calculation done in part a, Bill wondered if the depreciation expense should be included in the calculation. Bill had just completed his first finance class and was well aware that depreciation is not an actual out-of-pocket expense but rather an allocation of the cost of the printing equipment used in the business over its useful life. What do you think? What can you learn from the cash and accounting break-even points? a. The accounting break-even units of production is Ounits. (Round to the nearest integer.) The cash break-even units of production is units. (Round to the nearest integer.) ь. The where total fixed costs include both cash fixed costs and depreciation expense (which is not a cash expense for the period), while the depreciation) and as a result our cash flow is zero. (Select from the drop-down menus.) point tells us the level of sales necessary to cover our total fixed and variable operating costs point tells us the level of sales where we have covered our cash fixed costs (ignoring
(Related to Checkpoint 13.4) (Using break-even analysis) Mayborn Enterprises, LLC runs a number of sporting goods businesses and is currently analyzing a new T-shirt printing business. Specifically, the company is evaluating the feasibility of this business based on its estimates of the unit sales, price per unit, variable cost per unit, and fixed costs. The company's initial estimates of annual sales and other critical variables are shown here: E- a. Calculate the accounting and cash break-even annual sales volume in units. b. Bill Mayborn is the grandson of the founder of the company and is currently enrolled in his junior year at the local state university. After reviewing the accounting break-even calculation done in part a, Bill wondered if the depreciation expense should be included in the calculation. Bill had just completed his first finance class and was well aware that depreciation is not an actual out-of-pocket expense but rather an allocation of the cost of the printing equipment used in the business over its useful life. What do you think? What can you learn from the cash and accounting break-even points? a. The accounting break-even units of production is Ounits. (Round to the nearest integer.) The cash break-even units of production is units. (Round to the nearest integer.) ь. The where total fixed costs include both cash fixed costs and depreciation expense (which is not a cash expense for the period), while the depreciation) and as a result our cash flow is zero. (Select from the drop-down menus.) point tells us the level of sales necessary to cover our total fixed and variable operating costs point tells us the level of sales where we have covered our cash fixed costs (ignoring
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Data Table
Base Case
Unit sales
7,500
$15.49
Price per unit
Variable cost per unit
Fixed cash expense per year
$9.34
$10,100
$4,300
(Click on the icon e in order to copy its contents into a spreadsheet.)
Depreciation expense
Print
Done
Transcribed Image Text:(Related to Checkpoint 13.4) (Using break-even analysis) Mayborn Enterprises, LLC runs a number of sporting goods
businesses and is currently analyzing a new T-shirt printing business. Specifically, the company is evaluating the feasibility of
this business based on its estimates of the unit sales, price per unit, variable cost per unit, and fixed costs. The company's
initial estimates of annual sales and other critical variables are shown here: E
a. Calculate the accounting and cash break-even annual sales volume in units.
b. Bill Mayborn is the grandson of the founder of the company and is currently enrolled in his junior year at the local state
university. After reviewing the accounting break-even calculation done in part a, Bill wondered if the depreciation expense
should be included in the calculation. Bill had just completed his first finance class and was well aware that depreciation is not
an actual out-of-pocket expense but rather an allocation of the cost of the printing equipment used in the business over its
useful life. What do you think? What can you learn from the cash and accounting break-even points?
a. The accounting break-even units of production is units. (Round to the nearest integer.)
The cash break-even units of production is
units. (Round to the nearest integer.)
b. The
point tells us the level of sales necessary to cover our total fixed and variable operating costs
where total fixed costs include both cash fixed costs and depreciation expense (which is not a cash expense for the period),
while the
point tells us the level of sales where we have covered our cash fixed costs (ignoring
depreciation) and as a result our cash flow is zero. (Select from the drop-down menus.)
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