Consider the following income statement and answer the questions that follow:

Sales(100 units) $200
Variable costs (.80each) 80
Fixed costs 20
EBIT 100
Interest expense 30
EBT 70
Income tax 24
Net income 46
a)what is the firm's Breakeven Point in units?
b)draw a breakeven chart for this firm.

To calculate the breakeven point in units, we need to determine the number of units at which the company's total revenue equals its total costs. The formula for breakeven point is:

Breakeven Point (in units) = Fixed Costs / Contribution Margin

Step 1: Calculate the contribution margin per unit:
Contribution Margin per Unit = Sales per Unit - Variable Costs per Unit

In this case:
Sales per Unit = $200 / 100 units
Sales per Unit = $2

Variable Costs per Unit = $80 / 100 units
Variable Costs per Unit = $0.8

Contribution Margin per Unit = $2 - $0.8
Contribution Margin per Unit = $1.2

Step 2: Calculate the breakeven point in units:
Breakeven Point (in units) = Fixed Costs / Contribution Margin per Unit
Breakeven Point (in units) = $20 / $1.2
Breakeven Point (in units) = 16.67 units

Since you cannot have fractional units, we round up to the nearest whole number, so the firm's breakeven point in units is 17 units.

Now, let's draw a breakeven chart for the firm:

--------------------
| Sales |
| Revenue |
--------------------
| Total |
| Costs (TC) |
--------------------
| |
| |
| Breakeven |
| Point |
--------------------

The chart will have two intersecting lines. The vertical line represents the number of units sold, and the horizontal line represents the total costs and revenue.

Starting from the origin (0 units sold and $0 revenue/costs), draw the sales revenue line at an upward angle, representing increasing revenue with increasing units. This line will start at the origin and pass through the breakeven point on the vertical line.

Next, draw the total costs line at a steeper upward angle, representing increasing costs with increasing units. This line will also start at the origin but will pass through the breakeven point on the horizontal line.

The point where these two lines intersect is the breakeven point (at 17 units and $34 total costs/revenue). Any quantity below this point represents a loss, and any quantity above this point represents a profit for the firm.