Background The production manager, Christina, of Widgets.Co Production has just been approached with an exciting new opportunity by the marketing manager of the company. The marketing manager has given Christina some information and has asked her to determine whether this is a feasible opportunity. If so, what should the sales and marketing targets be for the company? The marketing manager and Christina have had their differences in the past when the company undertook ventures without consulting production. This caused remarkable problems, including one business venture in which the company lost significant amounts of money based on several flawed assumptions that were made by the sales department. Marketing feels that demand will be very elastic, with sales sensitive to the product price. As such, Christina received the following information from marketing: Annual Sales 1500 1300 1000 Sale Price $120 $160 $200 Information on Costs Based on the product design and details that Christina was given, she estimated that the company will have to increase its fixed costs by $164,000 to be able to produce up to 1300 units per year. To produce more than 1300 units, additional equipment and resources will be required, increasing the fixed costs to $180,000 per year. Christina's initial analysis of the product came to the conclusion that the product will take $180 to produce. Based on this, it would appear that the only option available for the company would be to maximize the price to ensure that the price per unit is higher than the unit variable price. Given the Fixed Cost required for the product of $164,000, at $180 to produce each unit, and a $200 sale price, the break even point for this venture currently lies at 8,200 units (in 8.2 years)