a.

Fixed Operating Cost

Q = Sales/price per unit = 880000/200 = 4400 units

EBIT = Q (P-V) – FC

Note: EAT = EBIT - tax so EAT/1-t = EBIT

EAT/1-t = Q (P-V) –FC (note if EBIT is given then no need to divide by 1-t)

24000/0.6 = 4400 ( 200 – 150) – FC

40000 = 220000 – FC

FC = 220000 – 40000

FC or Fixed operating cost = 180000

b.

Break even point in units

Qbe = FC/(P-V)

Qbe = 180000/50

Qbe = 3600

Break even point dollars

Sbe = Qbe (price)

Sbe = 3600 units x $200

Sbe = $720000

c. DOL = Q/Q – QBE

DOL 4000 4000/4000-3600 4000/400 10%
DOL 4400 4400/4400-3600 4400/800 5.5%
DOL 4800 4800/4800-3600 4800/1200 4%
DOL 5200 5200/5200-3600 5200/1600 3.25%
DOL 5600 5600/5600-3600 5600/2000 2.8%
DOL 6000 6000/6000-3600 6000/2400 2.5%