# Accounting Calculations: Breakeven Points

Calculate the unknown for the following situations based on the data below. All situations are independent of each other.

Total fixed costs $100,000

Unit selling price $50

Unit variable cost $30

a) Calculate the following:

1) break-even point in units

2) break-even point in dollar sales

b) Assume the unit selling price increases by 5%. Other data unchanged.

Calculate the break-even point in units.

c) Assume the unit variable costs increase by 10%. Other data is unchanged.

Calculate the break-even point in units.

d) Assume total fixed costs increase by $5,000. Other data is unchanged.

Calculate the break-even points in units.

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#### Solution Preview

Accounting Calculations: Breakeven Points

Calculate the unknown for the following situations based on the data below. All situations are independent of each other.

Total fixed costs $100,000

Unit selling price $50

Unit variable cost $30

Contribution margin per unit = Unit ...

#### Solution Summary

This solution is comprised of a detailed explanation to calculate the following:

1) break-even point in units

2) break-even point in dollar sales

Calculate break-even points: Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $30. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million a year and is depreciated straight line over 10 years to a salvage value of zero.

A. What is the accounting break-even level of sales in terms of number of diamonds sold?

B. What is the NPV break-even sales assuming a tax rate of 35%, a 10-year project life and a discount rate of 12%

Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $100. The materials cost for a standard diamond is $30. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million a year and is depreciated straight line over 10 years to a salvage value of zero.

A. What is the accounting break-even level of sales in terms of number of diamonds sold?

B. What is the NPV break-even sales assuming a tax rate of 35%, a 10-year project life and a discount rate of 12%

See attached template 8-9

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