Answer:
7,733 units
Explanation:
Breakeven point is one where revenue equals the cost.
In the main Factory:
Fixed cost = $40,000
Variable cost = $19,250 [($4.5 + $1.0) * 3,500 boxes]
Total cost = $59,250 [$40,000 + $19,250]
Revenue = $52,500 [3,500 * $15]
Net profit or loss : $52,500 - $59,250 = - 6,750 Loss
In the new Factory:
The break even point will be achieved when the loss of $6,750 in the main factory is covered by the new factory.
Fixed cost : $16,000
Variable cost : $6.0 + $1.0 = $7
Selling price = $15
16,000 + 6,750 + 7x = 15x
solving for x we get:
x = 2,844.
In the new factory 2,844 units needs to be produced in excess to achieve the breakeven point.
Total units required to produce 3,500 + 2,844 = 6,344.
If the company adds bonus of $0.80 for its sales force on each box sold above the breakeven then the cost will be increased.
Contribution Margin : 15 - [ 6 + 1 + 0.80 ] = $7.20
Box required to sell to produce net operating income of $10,000
10,000 / 7.20 = 1,389 units
Total units 7,733 [6,344 + 1,389]
