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# Answer to Question #50874 in Finance for asif

Question #50874
Farrelly enterprises has fixed operating cost of $500,000, variable operating cost per unit of$20 and a selling price of $40. The firm's capital structure consists of$600,000 loan at 10% interest, 10,000 shares of preferred stock paying an annual dividend of $3 per share and$50,000 shares of common stock outstanding. Farrelly has a 34% tax rate. Calculator Farrelly operating breakeven point in units and in dollar sales
1
2015-02-25T09:30:55-0500
FC = $500,000, VC per unit =$20, P = $40,$600,000 loan at 10% interest, 10,000 shares of preferred stock (dividends $3 per share),$50,000 shares of common stock outstanding, T = 34%.
Breakeven Point in Units = FC/(P - VC) = 500,000/(40 - 20) = 25,000 units
Breakeven Point in dollar sales = 25,000*$40 =$1,000,000.

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