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xxMikexx [17]
3 years ago
8

Hexon Printing Company projected the following information for next year: Selling price per unit $80 Contribution margin per uni

t $40 Total fixed costs $120,000 Tax rate 40% How many units must be sold to obtain an after-tax profit of $60,000
Business
1 answer:
Nonamiya [84]3 years ago
5 0

Answer:

Break-even point in units= 5,500

Explanation:

Giving the following information:

Selling price per unit $80

Contribution margin per unit $40

Total fixed costs $120,000

Tax rate 40%

Desired profit= $60,000

<u>First, we need to calculate the earnings before tax:</u>

EBT= desired profit / (1 - t)

EBT= 60,000 / (1 - 0.4)

EBT= $100,000

<u>Now, the break-even point in units using the following formula:</u>

Break-even point in units= (fixed costs + EBT)/ contribution margin per unit

Break-even point in units= (120,000 + 100,000) / (80 - 40)

Break-even point in units= 5,500

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