Question

In keegan corporation's most recent fiscal year, the company reported pretax earnings of $215,000. fixed costs totaled $325,800, the unit selling price of the firm's only product was $60, and the variable costs per unit were 40% of the selling price. based on this information, the firm's break-even point in units was:

Answer 1

To solve for the break-even point:
Break even = Fixed costs/ (sales price of unit - variable costs per unit)

Fixed costs = $325,800
Sales price of a unit = $60
Variable cost is 40% of sales price = (60)(.40) = $24.80

Break even = $325,800/(60-24.80)
Break even = $325,800/$35.20
Break even = 9,256 units