Boise Timber Co computes its breakeven point strictly on the

Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $8,100,000, but 10 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $25. How many units does the firm need to sell to reach the cash break-even point? Round your answer to the nearest whole number.) Cash break-even units

Solution

Cash break even point = Cash fixed cost/Contribution margin per unit

Cash fixed cost = 8100000*90% = 7290000

Cash break even point = 7290000/25 = 291600 Units