CVP Analysis Planning and Decision Making: ElectroSol Systems, Inc., has been organized to sell and install solar energy systems in the Southwest. The marketing consultants for the company estimate that at a selling price of $3,000 per unit, the company should be able to sell 10,000 units per year. However, the company's financial advisor believes sales will be 7,000 units per year at the same sales price.

The company's controller estimates annual fixed costs will equal $12 million and that the variable cost on each unit will be $1,600.

Required:

a. Determine the profit or loss at the 7,000-unit and 10,000-unit activity levels.

b. What is the break-even point?