8. A manufacturer of precision cutting tools has the capacity to make 1,000,000 cutting tools per year. Each sells for $15. The variable cost per unit to produce the cutting tools is $9 each. Annual fi xed costs for the manufacturer are

$3,500,000.

a. If the plant is operating at 50 percent of design capacity, how much profi t

(loss) is being earned?

b. At what percent of capacity must the plant operate to break even?

c. What is the cost per tool when operating at the level you determined in Part b?