Problem
Cranes candles will be produced in a new line of dripless candles in the coming years and has the choice of producing the candles in a large factory with a small number of workers or a small factory with a large number of workers. each candle will sell for 10.00. if the large factory is chosen the cost per unit to produce each candle will be 2.50. the cost per unit will be 7.00 in the small factory. the large factory would have fixed cash costs of 2.10 million and a depreciation expense of $300,000 per year, while those expenses would be $510,000 and $100,000 respectively in the small factory.
Calculate the pretax operating cash flow breakeven point for both factory choices for cranes candles.