Use the following information to compute fixed costs, depreciation, and operating cash flow: price per unit 71.00 variable cost per unit 52.75 cash break even quantity 7,500 units accounting break even quantity 9,800 units financial break even quantity 13,000 units fixed costs depreciation operating cash flow

Fixed costs = $136,875

Depreciation = $41,975

Operating Cash Flow =  $237,250

Explanation:

The formula to compute the break even point in units is shown below:

= (Fixed expenses ) ÷ (Contribution margin per unit)  

where,  

Contribution margin per unit = Selling price per unit - Variable expense per unit  

= $71 - $52.75

= $18.25

So,  

7,500 units = Fixed cost  ÷ $18.25

So, the fixed cost = 7,500 units × $18.25 = $136,875

Accounting break even point = (Fixed expenses + Depreciation ) ÷ (Contribution margin per unit)  

9,800 units = $136,875 + depreciation ÷ $18.25 units

$178,850  = $136,875 + depreciation

so, the depreciation equal to

= $178,850 - $136,875

= $41,975

The computation of the operating cash flow is shown below:

Financial Break Even Quantity = Number of units × contribution margin per unit

= 13,000 units × $18.25

= $237,250

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