Assume that your R&D team has a new design for their product Able next round that can reduce their material cost of producing units from $8.59 to $7.73. They pass on half of all cost savings by cutting the current price to customers.

For simplicity: Use current labor cost of $8.37

Assume all period costs as reported on Andrews Income Statement for Asia Pacific (Annual Report Page 5) will remain the same.

Current price is equivalent to $30.00

Shipping cost to Asia Pacific is $2.50 per unit

Determine how many units (000's) of product Able would need to be sold in Asia Pacific alone next round to break even on the product

Page 5 Round 0 GXM108636 007 Annual Report Dec. 31 2023 Income Statement:Asia Pacific Able Acre NA NA Tota Industry Avg. Common 100% Sales $11,139 $13,367 $24,506 $18,272 Variable Costs $3,109 $3,109 25% Direct Labor $6,219 $4,799 Direct Material $3,189 $7,869 $5,736 $4,680 32% $928 $928 Shipping Cost $1,857 $1,581 8% $121 Inventory Carry $0 $7,227 $15,944 65% Total Variable Costs $8,717 $12,238 Contribution Margin $3,912 $4,650 $8,562 $6,035 35% Period Costs Depreciation $0 S0 SG&A R&D $0 14% Promotions $1,750 $1,750 $3,500 $1,875 19% $2,100 Sales $2,500 $4,600 $2,400 $261 $261 Admin $217 $478 2% $4,067 ($155) $4,511 $139 $8,578 ($15) 35% Total Period $4,536 Net Margin $1,499 0% $0 0% $1,499 EBIT ($15) 0% Interest (Short & Long) $0 0% ($4) Taxes & Tariffs $375 0% Profit Sharing $23 $1,101 $0 0% ($12) Net Profit 0% Page 5 Round 0 GXM108636 007 Annual Report Dec. 31 2023 Income Statement:Asia Pacific Able Acre NA NA Tota Industry Avg. Common 100% Sales $11,139 $13,367 $24,506 $18,272 Variable Costs $3,109 $3,109 25% Direct Labor $6,219 $4,799 Direct Material $3,189 $7,869 $5,736 $4,680 32% $928 $928 Shipping Cost $1,857 $1,581 8% $121 Inventory Carry $0 $7,227 $15,944 65% Total Variable Costs $8,717 $12,238 Contribution Margin $3,912 $4,650 $8,562 $6,035 35% Period Costs Depreciation $0 S0 SG&A R&D $0 14% Promotions $1,750 $1,750 $3,500 $1,875 19% $2,100 Sales $2,500 $4,600 $2,400 $261 $261 Admin $217 $478 2% $4,067 ($155) $4,511 $139 $8,578 ($15) 35% Total Period $4,536 Net Margin $1,499 0% $0 0% $1,499 EBIT ($15) 0% Interest (Short & Long) $0 0% ($4) Taxes & Tariffs $375 0% Profit Sharing $23 $1,101 $0 0% ($12) Net Profit 0%