Fuentes, Inc. was a medium-sized business that manufactured a custom "side-car" that could be attached to large motorcycles, such as the Honda Gold-Wing. Based upon a production of 3,000 units, the company data is as follows: Cost for 3,000 units
Variable materials $100
Variable labor 150
Variable factory overhead 50
Fixed factory overhead 120
Variable marketing costs 50
Fixed marketing costs 140
a. Assuming the units sell for $740, what is the breakeven sales amount in terms of dollars and units?
b. if unit sales could be increased to 3,500 by lowering the price to $650, would the company be better off than it is now (at 3,000 units)? Explain.