Rwjj Finance Study Notes

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|In each of the following cases, find the unknown variable: (Do not include the dollar signs ($). Round your |

|answers to 2 decimal places. (e.g., 32.16)) |

|ACCOUNTING |UNIT PRICE |UNIT VARIABLE |FIXED COSTS |DEPRECIATION |

|BREAKEVEN | |COST | | |

|1 |80,800     |$47    |$27     |$726,000     |[pic]    |

|2 |139,000     |[pic]   |61     |3,100,000     |$1,200,000     |

|3 |5,111     |93    |[pic]     |189,000     |85,000     |

|[pic] |

Explanation:

|We can use the accounting breakeven equation: |

|QA = (FC + D)/(P – v) |

|  |

|to solve for the unknown variable in each case. Doing so, we find: |

|  |

|(1): QA = 80,800 = ($726,000 + D) / ($47 – 27) |

|      D = $890,000 |

|  |

|(2): QA = 139,000 = ($ 3.1M + 1.2M) / (P – $61) |

|      P = $91.94...