Purchase Solution

Computing Break-Even Units and Sales Dollars

Not what you're looking for?

Ask Custom Question

AAA Auto Parts produces mufflers that sell for $75 each. Variable costs are $25, and fixed costs are $25,000.

1. Compute the break-even point in units.
2. Compute the break-even in sales.
3. Find the sales (in units) needed for a before tax profit of $35,000. (Hint: look at the profit as a part of the fixed cost.)
4. Using the information in Part c, find the sales (in units) for an after-tax profit of $35,000. Use a tax rate of 40 percent.

Purchase this Solution

Solution Summary

This solution illustrates the computation of break-even sales in units and dollars using neat, step by step calculations.

Solution Preview

1. The break-even point in units=Fixed Costs/(Sales price/unit-Variable costs/unit). In this case, the break-even point in units=$25,000/($75-$25), or 500 units.

2. You can use either of two ways to compute the break-even point in sales dollars. First, compute the break-even point in units and multiply by the unit selling price. In this ...

Purchase this Solution


Free BrainMass Quizzes
Lean your Process

This quiz will help you understand the basic concepts of Lean.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Introduction to Finance

This quiz test introductory finance topics.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations