Answer:
The company should sell at least 2,250 units to break even
Step-by-step explanation:
We need to calculate what is know as break-even point (BEP).
It can be calculated as
[tex]BEP=\frac{FC}{p-vc}[/tex]
FC: fixed cost
p: price
vc: variable cost
The variable cost are expressed as 20% of the revenue, so it can be calculated that vc=0.2*p=0.2*4=0.8
Now we can calculate the BEP
[tex]BEP=\frac{FC}{p-vc}=\frac{7200}{4-0.8}=\frac{7200}{3.2}= 2,250\, units[/tex]