Q1) Generators, Inc. manufactured emergency backup generators for use in large commercial buildings. Costs of manufacturing and marketing generators at company's normal volume of 3,000 units per month are shown in Exhibit 1.
Exhibit 1 Costs per Unit for Generators
| Unit Manufacturing costs: |
|
|
| Variable Materials |
1000 |
|
| Variable Labor |
1500 |
|
| Variable Overhead |
500 |
|
| Fixed Overhead |
1200 |
|
| Total Manufacturing Cost |
|
4200 |
| Unit Marketing Costs: |
|
|
| Variable |
500 |
|
| Fixed |
1400 |
|
| Total Marketing Cost |
|
1900 |
| |
|
|
| Total Unit Cost: |
|
6100 |
Following questions refer only to data given above. Unless otherwise stated, suppose there is no connection between situations explained in each of the questions, each is to be treated independently. Unless otherwise stated, regular selling price of $7,400 per unit must be assumed. Ignore income taxes and other costs which are not mentioned in Exhibit 1 or in question itself.
Determine break-even volume in units? In sales dollars?