12 O-clock manufacturing specializes in producing glass slippers for fairy-tale princesses. Unfortunately, they havent quite figured out how to stop their carriages turning back into pumpkins after midnight. Each glass slipper sells for $300. Currently, the factory in which the glass slippers are made allows for a maximum production volume of 3,000 slippers each month. $0.30 from each sales dollar is contribution margin. Fixed costs associated with the slippers total $250,000 in the existing facility.

The companys marketing department predicts that if demand for the slippers exceeds the 3,000 containers that the company can produce in its current operating facility, an additional operating space can be rented nearby at a fixed cost of $40,000 per month, which would have a production capacity of an additional 2,000 slippers. The variable cost percentage of the rented facility would be 75% due to somewhat less efficient operations than in the companys current facility.

Which of the following is incorrect?

A.

Before considering the new facility, to make a monthly target profit of $25,000, 3,056 units need to be sold.

B.

Even if the company produces less than 3,000 slippers, the total fixed costs will be $250,000.

C.

The maximum monthly operating income that the company could make with the two facilities is $130,000.

D.

The monthly breakeven point in the existing facility is less than the monthly breakeven point in the rented facility.

E.

As long as the companys monthly target profit is less than or equal to $20,000, it will not need to rent the additional facility.