Problema Solution

If TechCor has fixed costs of $60,000, variable costs of $1.20/unit, sales price/unit of $7, and depreciation expense of $25,000, what is their cash breakeven in units?

Answer provided by our tutors

Fixed Cost = $60,000

Depreciation = $25,000

Selling Price per Unit = $7 per unit

Variable Cost per Unit = $1.20 per unit

Cash Breakeven in Units = (Fixed Cost - Depreciation) / (Selling Price per Unit - Variable Cost per Unit)

Cash Breakeven in Units = (60,000 - 25,000)/(7 - 1.20)

Cash Breakeven in Units = 6035 units approximately