"Corporate Finance": Floating coefficient
The unit contribution margin for a product is $12. Assuming fixed costs of $12,000, interest costs of $3,000, and a tax rate of 40%, the operating breakeven point (in units) is closest to:
The following information is available for a company’s bank account:
The float factor for the company is closest to:
B is incorrect because the numerator is ($12,000 + $3,000) × (1 – 40%).
A is incorrect because the numerator is ($12,000 + $3,000) making it the breakeven quantity, QBE, and not the operating breakeven quantity, QOBE.
A is correct.
B is incorrect because it uses (Total deposit/Average daily float).
C is incorrect because it uses (Average daily deposit/Average daily float).