(Comprehensive) GreenX Glass Recyclers has processing plants in Delaware and Florida. Both plants use recycled glass to produce jars that are used in food canning by a variety of food processors. The jars sell for $20 per hundred units. Budgeted revenues and costs for the year ending December 31, 1998, are

Home office costs are fixed and are allocated to manufacturing plants on the basis of relative sales levels. Fixed regional promotional costs are discretion¬ ary advertising costs needed to obtain budgeted sales levels.
Because of the budgeted operating loss, GreenX is considering the possi¬ bility of ceasing operations at its Delaware plant. If GreenX were to cease op¬ erations at its Delaware plant, proceeds from the sale of plant assets would exceed their book value and exactly cover all termination costs; fixed factory overhead costs of $50,000 would not he eliminated. GreenX is considering- the following three alternative plans:

PLAN A: Expand Delaware’s operations from its budgeted 11,000,000 units to a budgeted 17,000,000 units. It is believed that this can be accomplished by increasing Delaware’s fixed regional promotional expenditures by $120,000. PLAN B: Close the Delaware plant and expand Florida’s operations from the current budgeted 20,000,000 units to 31,000,000 units to fill Delaware’s bud¬ geted production of 11,000,000 units. The Delaware region would continue to incur promotional costs to sell the 11,000,000 units. All sales and costs would be budgeted through the Florida plant.
PLAN C: Close the Delaware plant and enter into a long-term contract with a competitor to serve the Delaware region’s customers. This competitor would pay GreenX a royalty of $2.50 per 100 units sold. GreenX would continue to incur fixed regional promotional costs to maintain sales of 11,000,000 units in the Delaware region.

a. Without considering the effects of implementing Plans A, B, and C, compute the number of units that must be produced and sold by the Delaware plant to cover its fixed factory overhead costs and fixed regional promotional costs.

b. Prepare a schedule by plant, and in total, computing GreenX’s budgeted contribution margin and operating income resulting from the implementa¬ tion of Plan A, Plan B, and Plan C.LO1

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(000 OMITTED) DELAWARE FLORIDA TOTAL Sales $2,200 $4,000 $6,200 Variable production costs: Direct material $ 550 $1,000 $1,550 Direct labor 660 1,000 1,660 Factory overhead 440 700 1,140 Fixed factory overhead 700 900 1,600 Fixed regional promotion costs 100 100 200 Allocated home office costs 110 200 310 Total costs $2,560 $3,900 $6,460 Operating income (loss) $ (360) $ 100 $ (260)