Big Sports Manufacturing produces basketballs used for indoor and outdoor games. The company has had significant troubles over the past few years, as the number of competitors in the basketball market has increased dramatically. Recently, the company was forced to cut back production in order to decrease its rising inventory level. The following is a list of costs for the company in 2020:

Variable costs per unit
Rubber		$2.75
Other materialsindirect		1.40
Ball makersdirect labour		5.60
Factory electricity usage		0.50
Factory water usage		0.15
Other labourindirect		0.27
Selling and administrative expenses		0.40
Fixed costs per year
Factory property taxes		$120,000
Factory sewer usage		50,000
Factory electricity usage		40,000
Selling and administrative expenses		83,000

Big Sports Manufacturing had an ending inventory of 85,000 basketballs in 2019. For these units, the fixed manufacturing overhead cost was $4.00 per unit and variable manufacturing costs were $9.67 per unit. In 2020, the company produced 35,000 basketballs, sold 72,500 basketballs, and had an ending inventory of 47,500 basketballs. The basketballs sold for $18 each. Big Sports uses the FIFO method.

Big Sports chief financial officer, Mr. Swetkowski, is contemplating the benefits of using the absorption-costing and variable-costing approaches. He has asked you to perform a variety of tasks to help him analyze the differences between the two approaches: 1. Reconcile the differences between the income values of the two approaches.

Reconciliation of net income
Variable-costing net income		$
FMOH deferred in ending inventory
FMOH released from beginning inventory
Absorption-costing net income		$

2. Mr. Swetkowski has heard that some basic managerial tasks can be better performed when variable costing is used. Calculate the break-even point in units for the company in 2020 using the variable-costing data. (Round answer to 0 decimal places, e.g. 5,275.)

Break-even point

units