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    Cash break-even analysis for Gibson & Sons

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    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?

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    https://brainmass.com/business/accounting/cash-break-even-analysis-gibson-sons-97318

    Solution Preview

    As the depreciation is noncash expense, which means that there would be no cash outflow, then the depreciation should be deducted ...

    Solution Summary

    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.

    $2.19

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