Asked by ebony lofton on Jun 09, 2024
Verified
A project has an accounting break-even point of 2,000 units. The fixed costs are $4,200 and the depreciation expense is $400. The projected variable cost per unit is $23.10. What is the projected sales price?
A) $20.80
B) $21.00
C) $21.20
D) $25.40
E) $25.60
Variable Cost
Expenses that change in proportion to the activity or volume of business, such as materials, labor, and transaction fees.
Sales Price
The price at which a product or service is offered for sale in the market.
Fixed Costs
Expenses that do not change with the level of production or sales, examples include rent, salaries, and insurance premiums.
- Interpret the ramifications of adjustments in sales volume, costs, and pricing on the economic success of a project.
- Calculate the earnings before interest and taxes (EBIT) for given scenarios.
Verified Answer
NM
NATHAN MBAYO MWAMBAJun 13, 2024
Final Answer :
D
Explanation :
The accounting break-even point is calculated as the point where total revenue equals total costs (which include fixed costs, variable costs, and depreciation). To find the sales price per unit, we use the formula: Sales Price = (Fixed Costs + Depreciation + (Variable Cost per Unit * Break-Even Quantity)) / Break-Even Quantity. Plugging in the given values: Sales Price = ($4,200 + $400 + ($23.10 * 2,000)) / 2,000 = $25.40.
Learning Objectives
- Interpret the ramifications of adjustments in sales volume, costs, and pricing on the economic success of a project.
- Calculate the earnings before interest and taxes (EBIT) for given scenarios.