CEVAP:

The CVP analysis is founded on variable costing, where the costs are classified as variable or fixed according to their cost behaviour. Businesses record depreciation and amortization as fixed costs, however they are non-cash. The cash break-even calculation accounts only for cash fixed costs and the depreciation(and/or amortization) expense is deducted from the total fixed costs. The cash fixed costs are then divided by the contribution margin to determine the cash break-even quantity.

Cash Break-even Quantity = (FC - Depreciation Expense)/ (P -VC)