ABC Corp. has estimated the following income statement for its next fiscal year
Sales $20,000,000
Variable costs 6,000,000
Revenue before fixed costs 14,000,000
Fixed costs 9,000,000
EBIT 5,000,000
Interest expense 900,000
Earnings before taxes 4,100,000
Taxes (35%) 1,435,000
Net income $2,665,000
a. What is the break-even point in sales dollars for the firm?
b. If the average unit cost is $20, what is the break-even point in units?
a. $9,000,000/(1 - ($6,000,000/$20,000,000)) = $12,857,143
b. $12,857,143/$20 = 642,857 units
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