Answered: question 3 a) Price RM54 per unit…

Business

Accounting

question 3 a) Price RM54 per unit Variable cost RM30 per unit Fixed costs RM9,000 Required retur

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

question 3 a)

Price	RM54 per unit
Variable cost	RM30 per unit
Fixed costs	RM9,000
Required return	15%
Initial investment	RM18,000
Life	4 years

Assume the initial investment id depreciated straight line to zero over the life of the project. Ignoring the effect of taxes, calculate:

i) Accounting break-even quantity.

ii) Cash break-even quantity

iii) Financial break-even quantity

iv) Degree of operating leverage at financial break-even lvel of output.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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