Question

Sunland’s Candles will be producing 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 be sold for $10. If the large factory is chosen, the cost per unit to produce each candle will be $3.00. The cost per unit will be $7.50 in the small factory. The large factory would have fixed cash costs of $2.5 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 accounting operating profit break-even point for both factory choices for Sunland’s Candles. (Round answers to nearest whole units, e.g. 152.)

The accounting break-even point for large factory is enter a number of units units and for small factory is enter a number of units units.

Answer 1