please give a step by step explanation
BreakEven and Net Income Planning
Hank Company has recently leased facilities for the manufacture of a new product. Based on studies made by its accounting
personnel, the following data are available:
Estimated annual sales: units
Selling expenses are expected to be of sales, and the selling price is $ per unit. Ignore income taxes in this problem.
a Compute a breakeven point in dollars and in units. Assume that manufacturing overhead
and administrative expenses are fixed, but that other costs are variable. Use the contribution
margin ratio percent, rounded to one decimal place, in your calculation of breakeven in sales
dollars. Round final answers to whole numbers.
b What would net income before income tax be if units were sold?
$
c How many units must be sold to earn a net income before income tax of of sales?
TIP: Determine the minimum number of units assuming Hank does not sell partial units.
