A project has the following estimated data – price = $65 per unit; variable costs = $33 per unit; fixed costs = $4,000; required return = 16%; initial investment = $9,000; life = three years. Ignore the effect of taxes and assume straight-line depreciation to zero.
a. What is the accounting break-even quantity?
b. What is the cash break-even quantity?
c. What is the financial break-even quantity?
d. What is the degree of operating leverage at the financial break-even level of output?