Mosler Company has compiled this information for a new project:
Initial investment: $229,700
Fixed costs: $66,800
Variable costs: $5.07 per unit
Selling price: $12.99 per unit
Discount rate: 14 percent
Project life: 4 years
Tax rate: 34 percent
Depreciation is straight-line to zero over the project’s life. What is the accounting break-even point?
11,301.82 units
13,200.00 units
15,684.97 units
10,352.08 units
12,388.60 units
2) Southern Goods is analyzing a proposed project using standard sensitivity analysis. The company expects to sell 4,500 units, ±11 percent. The expected variable cost per unit is $13 and the expected fixed costs are $12,000. Cost estimates are considered accurate within a ± 5 percent range. The depreciation expense is $5,000. The sale price is estimated at $22 a unit, ±2 percent
What is management’s best guess of contribution margin value?
a. $ 2.67
b. $ 10.33
c. $9.00
d. $7.00
e. $8.72