Problem 1: Red Cat Firecrackers is considering whether to construct a large or small factory to manufacture its firecrackers. Regardless of the production technique, each bundle of firecrackers sells for $4.00. If the large factory is selected, then the variable cost per bundle of firecrackers will be $0.50, while the fixed costs will be $300,000 and the yearly depreciation and amortization amount will be $100,000. When the small factory is chosen, then the variable cost per bundle of firecrackers will be $1.75 while the fixed costs will be $100,000 and the annual depreciation and amortization amount will be $10,000.
problem1. Compute the number of firecracker bundles for Red Cat such that the accounting operating profit is the same, regardless of factory choice, that is, compote the crossover level.