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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?

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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 = [tex]\frac{427500}{9500}=45[/tex] dollars

Variable costs amount to 40% of sales.

So, the contribution margin per unit cost is [tex]0.60\times45=27[/tex] dollars

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

fixed cost/contribution margin per unit cost

= [tex]\frac{226800}{27}[/tex] = 8400

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