Problem:
ABC Company sells a large pack of "Cutie" diapers for $20. One pack of diapers requires two pounds of raw material and one hour of direct labor for manufacture. Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed supervisory costs are $2,000 per month and EB rents its factory for $4,000 per month.
Required:
Question 1) How many packs of diapers should EB sell every month to break even? Explain the solution in detail.