Break even point in sales dollars for the firm


Problem:

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

Required:

Question 1: What is the break even point in sales dollars for the firm?

Question 2: If the average unit cost is $20, what is the break even point in units?

Note: Provide thorough explanation of every question given in the problem.

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Accounting Basics: Break even point in sales dollars for the firm
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