Answer:
Results are below.
Explanation:
<u>a) To calculate the break-even point in units, we need to use the following formula:</u>
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 75,000 / 4
Break-even point in units= 18,750
<u>b)To calculate the break-even point in dollars, we need to use the following formula:</u>
<u>Break-even point (dollars)= fixed costs/ contribution margin ratio</u>
Break-even point (dollars)= 75,000 / (4/10)
Break-even point (dollars)= $187,500
<u>c) Desired profit= $40,000</u>
<u></u>
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (75,000 + 40,000) / 4
Break-even point in units= 28,750
<u>d) Desired profit= $35,000</u>
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= (75,000 + 35,000) / 0.4
Break-even point (dollars)= $275,000
<u>e) Desired profit (before taxes)= 25,000/0.7= $35,714</u>
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= 110,714/4
Break-even point in units= 27,679
Break-even point (dollars)= (fixed costs + desired profit) / contribution margin ratio
Break-even point (dollars)= 110,714/0.4
Break-even point (dollars)=$276,785
