CORP FIN--CONNECT ONLY+PROCTORIO+180 DAY
CORP FIN--CONNECT ONLY+PROCTORIO+180 DAY
12th Edition
ISBN: 9781266118562
Author: Ross
Publisher: MCG
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Chapter 7, Problem 20QAP

A

Summary Introduction

Adequate information:

The initial investment required is $7,200 that is the cost of the press.

There are no fixed assets.

The tax rate is 21% .

  $7,200 is depreciated in the 1st period.

The cost of the shirt is $3.20 that can be sold for $15 per piece.

To compute: Accounting Break-even point.

Introduction: By dividing the fixed production costs by the price per unit less the variable production costs, the breakeven point is determined in accounting. The production level at which a product's expenses and revenues are equal is known as the breakeven point.

B

Summary Introduction

Adequate information:

  5,000 shirts are sold in year 1 .

The company has to pay $20,000 to continue operations.

The discount rate is 12% and sales will be such for 3 years.

To compute: Financial break-even point.

Introduction: Numerous aspects of business and finance make use of breakeven points. It is the production level where total production revenue and total production costs are equal in accounting terms.

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