2. Assume there are no taxes for this question. The firm is exploring a new project...
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2. Assume there are no taxes for this question. The firm is exploring a new project where output sells for $30 per unit, variable costs are $18 per unit, depreciation is $500 per year, and annual fixed costs are $680. a. Calculate the accounting break-even level of output, and indicate how we define this b. Calculate the cash break-even level of output, and indicate how we define it. c. If the projected sales for this project are in that projection, how would you use the results from parts a and b to explain the 105, and you know there is some margin of error situation to your boss? 2. Assume there are no taxes for this question. The firm is exploring a new project where output sells for $30 per unit, variable costs are $18 per unit, depreciation is $500 per year, and annual fixed costs are $680. a. Calculate the accounting break-even level of output, and indicate how we define this b. Calculate the cash break-even level of output, and indicate how we define it. c. If the projected sales for this project are in that projection, how would you use the results from parts a and b to explain the 105, and you know there is some margin of error situation to your boss?
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