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
