1. At the accounting break-even point, your company sells 63,250 units at a price of $25 each. At this level of production, the depreciation is $135,000 and the variable cost per unit is $5.25. What is the amount of the fixed costs at this production level?
2. You are analyzing a project with anticipated sales of 8,000 units, plus or minus 2 percent. The variable cost per unit is $12 plus or minus 2 percent and the expected fixed costs are $245,000 plus or minus 1 percent. The sales price is estimated at $68.50 a unit, plus or minus 3 percent. The depreciation expense is $68,000 and the tax rate is 35 percent. What is the earnings before interest and taxes under the base-case scenario? What is OCF?