Calculation of Break even volume in units.
Generators, Inc. produced emergency backup generators for use in large commercial buildings. The costs of manufacturing and marketing the generators at the company's normal volume of 3,000 units per month are shown in Exhibit 1.
Exhibit 1 Costs per Unit for Generators
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Unit Manufacturing costs:
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Variable Materials
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1000
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Variable Labor
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1500
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Variable Overhead
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500
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Fixed Overhead
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1200
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Total Manufacturing Cost
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4200
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Unit Marketing Costs:
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Variable
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500
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Fixed
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1400
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Total Marketing Cost
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1900
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Total Unit Cost:
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6100
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The following questions refer only to the data given above. Unless otherwise stated, assume there is no connection between situations described in each of the questions, each is to be treated independently. Unless otherwise stated, a regular selling price of $7,400 per unit should be assumed. Ignore income taxes and other costs that are not mentioned in Exhibit 1 or in the question itself.
What is the break-even volume in units? In sales dollars?