Based on the fact that Chester decides to absorb the new labor cost, the units needed to breakeven would be <u>1,566 units. </u>
The current fixed costs are $8,346.
The current contribution margin is $11,401
The units sold are:
<em>= Sales / Selling price </em>
= 30,785 / 16
= 1,924 units
The new contribution margin would be:
<em>= Current contribution margin - Increase in labor costs </em>
= 11,401 - ( (3.55 - 2.95) x 1,924)
= $10,255.60
Breakeven point is:
<em>= Fixed costs / Contribution margin per unit</em>
= 8,346 / (10,255.60÷ 1,924 units)
= 1,566 units
In conclusion, the breakeven point is 1,566 units
Find out more about the calculation of breakeven point at brainly.com/question/9212451.
