A regional soft drink manufacturer is considering opening a new manufacturing plant in the Midwest.Its total fixed costs are $100 million, with the cost of the new plant included in that figure at a depreciatedvalue based on the expected life of the facility. It plans to sell soft drinks through its distributors to itsexisting retail accounts. A review of consumer advertising shows that $13.99 is a common price for a 24-pack of 12-oz cans of soda at the local big box stores. Retailer margins in the industry are estimated to beapproximately 30% based on the retail selling price. The manufacturing variable costs of the soda areestimated to be $0.28 per can.

[a] Calculate the break-even volume.

[b]What would happen to the break-even point if the fixed costs could be reduced by 35% annually?

[c] What would happen if the variable costs decreased to $0.24 based on declines in commodity costs?

[d] Finally, what would the break-even be if the firm wanted to make a $20 million profit?

[e] Comment on the managerial significance of these numbers, based on your understanding of the break-even concept.