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Hammerhead Charters runs fishing trips out of the local port. Hammerhead charges $50 per trip for a half-day trip. Variable costs for Hammerhead total $20 per trip and the fixed costs are $6,000 per month. Hammerhead is subject to an income tax rate of 25 percent. Required: a. How many trips must Hammerhead sell to break even

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letmeanswer

The number of trips that Hammerhead must sell to get break even is 200 trips.

Explanation:

Calculation of Break Even Point:

Break Even Point = Fixed Cost divided by Contribution Per Unit

The given data : Fixed Cost = $6,000

Contribution Per Unit = Selling Price minus Variable cost per unit

Thus, Contribution Per Unit = $50 - 20 = $30

Break Even Point = 6,000 / 30 = 200 trips

Thus, the number of trips that Hammerhead must sell to get break even is 200 trips.

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