Final answer:
The break-even point for Eaton Tool Company is calculated as the fixed costs divided by the difference between the unit selling price and the variable cost per unit. With fixed costs of $479,400, a selling price of $100 per unit, and a variable cost of $53 per unit, the company needs to sell 10,200 units to break even.
Step-by-step explanation:
The break-even point is the number of units that the Eaton Tool Company must sell to cover its fixed and variable costs. To calculate the break-even point, we can use the following formula:
Break-Even Point (units) = Fixed Costs / (Unit Selling Price - Variable Cost per Unit)
In this case, Eaton Tool Company has fixed costs of $479,400, a selling price of $100 per unit, and variable costs of $53 per unit. Substituting these values into the formula gives us:
Break-Even Point (units) = $479,400 / ($100 - $53)
Break-Even Point (units) = $479,400 / $47
Break-Even Point (units) = 10,200 units
Therefore, Eaton Tool Company needs to sell 10,200 units to break even.
The break-even point can be calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable costs per unit.
In this case, the fixed costs are $479,400, the selling price per unit is $100, and the variable costs per unit are $53. So, the contribution margin per unit is $47 ($100 - $53). Using this information, we can calculate the break-even point:
Break-even point = Fixed costs / Contribution margin per unit = $479,400 / $47 = 10,200 units