A&B Beverages expects to earn $50,000 next year after taxes. Sales will be $375,000. The store is located near the shopping district surrounding Blowing Rock University. Its average product sells for $27 a unit. The variable cost per unit is $14.85. The store experiences a 40 percent tax rate.
a. What are the store’s fixed costs expected to be next year?
b. Calculate the store’s break-even point in both units and dollars.
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