Computation of the accounting break-even level of output

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Reference no: EM1312743

You are considering a new product launch. The project will cost $870,000, have a 4-year life, and have no salvage value; depreciation is straight -line to zero. Sales and projected at 210 units per year; price per unit will be $20,000. Variable cost per unit will be $16,000, and fixed costs will be $348,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 36 percent.
The accounting break-even level of output for this project is _________ units. (Round your answer to the nearest whole number, e.g. 32.) The degree of operating leverage at the accounting break-even point is ________. (Round your answer to 2 decimal places, e.g. 32.16) Thus, for every 1% increase in unit sales, OCF will change by ________ percent. (Do not include the percent sign (%). Round your answer to 2 decimal places, e.g. 32.16.)

Reference no: EM1312743

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