Question

Tom's Trashbins Inc. has fixed costs of $226,800. The firm's sales are expected to be $427,500 this year if the firm sells 9500 units. Variable costs amount to 40 percent of sales. What is the breakeven point in units for Tom's Trashbins?

Answer 1

Answer:

The break even point is 8400.

Step-by-step explanation:

Tom's Trashbins Inc. has fixed costs of $226,800.

The firm's sales are expected to be $427,500 this year if the firm sells 9500 units.

The unit sales price is = $\frac{427500}{9500}=45$ dollars

Variable costs amount to 40% of sales.

So, the contribution margin per unit cost is $0.60\times45=27$ dollars

So, the break even point in units for Tom's Trashbins is =

fixed cost/contribution margin per unit cost

= $\frac{226800}{27}$ = 8400