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Break-even point and the cash break-even point

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(a) What is the difference between the (ordinary) break-even point and the cash break-even point and which will be the greater?

(b) Pharmaceutical Bhd manufactures medical products which are sold to pharmacies and clinics. The average selling price of its finished product is $ 180 per unit. The variable cost for these same units is $ 110. Pharmaceutical Bhd incurs fixed costs of $ 630,000 per year. Required to answer the followings:

i) What is the break-even point in units for the company?

ii) What is the Ringgit Malaysia sales volume the firm must achieve to reach the break-even point?

iii) What would be the firm's profit or loss at the following units of production sold: 12,000 units? 15,000 units? & 20,000 units?

iv) Find the degree of operating leverage for the production and sales levels given in part (iii) above.

Reference no: EM13912396

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