The Foggy Daze Company sells a "one size fits all" rain poncho for $11.50.Variable costs per unit are $3.86,while total fixed costs amount to $572,200.The corporate tax rate is 30% and the company wants to earn an after-tax profit of $209,000.The breakeven point in units is:
A)102,251
B)113,975
C)75,720
D)74,896

Question

Quizplus · Accepted Answer

To find the breakeven point in units, we use the formula: Breakeven Point in Units = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, Total Fixed Costs = $572,200, Selling Price per Unit = $11.50, and Variable Cost per Unit = $3.86. So, Breakeven Point in Units = $572,200 / ($11.50 - $3.86) = $572,200 / $7.64 = 74,896 units (rounded to the nearest whole number).

The Foggy Daze Company Sells a "One Size Fits All