6. You are considering a new product launch. The project will cost $630,000, have a 5-year life,...
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6.You are considering a new product launch. The project will cost $630,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sale price per unit will be $24,000, variable cost per unit will be $12,000, and fixed costs will be $283,000 per year. The relevant tax rate is 30%. What is the accounting break-even quantity? What is the cash break-even quantity? What is the financial break-even quantity? What is the degree of operating leverage at the accounting break-even level of output? Please explain the meaning of degree of operating leverage.
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