A company has $2.5 million of sales today, SG&A costs of $2 million excluding depreciation, annual depreciation of $0.6 million, and a COGS of 70%. Management estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 5% of sales increment, and the increase of depreciation will equal to 4% of sales increment. No other income during this time. • Then what are the cash breakeven sales? $ Then what are the book breakeven sales? $ thousand thousand

A company has $2.5 million of sales today, SG&A costs of $2 million excluding depreciation, annual depreciation of $0.6 million, and a COGS of 70%. Management estimates that if there is a large growth in sales, then the increase of SG&A excluding depreciation will equal to 5% of sales increment, and the increase of depreciation will equal to 4% of sales increment. No other income during this time. • Then what are the cash breakeven sales? $ Then what are the book breakeven sales? $ thousand thousand

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 1P

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