Gibson & Sons, an appliance manufacturer, computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $1,200,000, but 25 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $2.40. How many units does the firm need to sell to reach the cash break-even point?© BrainMass Inc. brainmass.com June 3, 2020, 7:24 pm ad1c9bdddf
As the depreciation is noncash expense, which means that there would be no cash outflow, then the depreciation should be deducted ...
This solution is comprised of a detailed explanation and calculation to answer how many units does the firm need to sell to reach the cash break-even point.