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8.7 Consider the following information for a big-screen television distributor:

Sales price per TV = \$1,500
Variable costs per TV = \$1,100
Fixed costs per year = \$120,000
Depreciation per year = \$20,000
Tax rate = 35%
How many units must the distributor sell in a given year to break even (in terms of accounting profit)?

8.12 J.'s Toys Inc. just purchased a \$200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for \$25. The variable cost per toy is \$5, and the firm incurs fixed costs of \$350,000 each year. The corporate tax rate for the company is 25 percent. The appropriate discount rate is 12 percent. What is the present value break-even point for the project?

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https://brainmass.com/business/finance/break-even-121968

#### Solution Preview

8.7

Consider the following information for a big-screen television distributor:

Sales price per TV = \$1,500
Variable costs per TV = \$1,100
Fixed costs per year = \$120,000
Depreciation per year = \$20,000
Tax rate = 35%
How many units must the distributor sell in a given year to break even (in terms of accounting profit)?

Selling price= \$1,500 per TV
variable cost= \$1,100 per TV
Contribution= \$400 per TV

Fixed Cost + Depreciation= \$140,000 =120000+20000

Therefore, Breakeven units= 350 =140000/400

Answer: 350 TV sets

8.12
J.'s Toys Inc. just purchased a \$200,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic ...

#### Solution Summary

The solution provides answers to two questions on break even.

\$2.49