4. Suppose Taylor Furniture can lease additional machining capacity on an as-needed basis. What is the maximum amount that Marion Taylor would be willing to pay for each hour of additional machining capacity in the coming year? (3)

a) Based on demand, Pitfall Company has been concluded that the sales mix will be 40% chocolate chip, 25% peanut butter and 35% sugar cookies to hit the 100% production capacity. Each cookie has different variable costs:

Types of Cookies Variable Cost Selling Price Chocolate Chip $2.75 $7.00 Peanut Butter $2.25 $5.50 Sugar Cookies $2.00 $4.50 Determine the number of units Pitfall will have to sell to break even? Assume fixed cost will be $40,650. (7)