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Chester has a new design for their product City next round that can reduce their material cost of producing units from $8.14 to $7.32. Chester

Chester has a new design for their product City next round that can reduce their material cost of producing units from $8.14 to $7.32. Chester passes on half of all cost savings by cutting the current price to customers. For simplicity: - Use current labor costs of $4.06 - Assume all period costs as reported on Chester's Income Statement (Annual Rpt Pg 2) will remain the same.

Determine how many units (000) of product City would need to be sold next round to break even on the product.

(Product Name:) Cell City Cozy Cute Crimp Cake Na Na 2021 Total Common Size
Sales $16,174 $34,748 $40,214 $31,895 $32,448 $23,167 $0 $0 $178,646 100.0%
Variable Costs:
Direct Labor $1,852 $7,426 $9,843 $5,881 $8,616 $4,675 $0 $0 $38,293 21.4%
Direct Material $5,654 $15,370 $16,581 $11,722 $13,843 $9,782 $0 $0 $72,951 40.8%
Inventory Carry $544 $449 $753 $616 $68 $0 $0 $0 $2,430 1.4%
Total Variable $8,049 $23,244 $27,178 $18,219 $22,527 $14,457 $0 $0 $113,674 63.6%
Contribution Margin $8,124 $11,504 $13,036 $13,675 $9,922 $8,711 $0 $0 $64,972 36.4%
Period Costs:
Depreciation $3,833 $4,753 $2,380 $2,267 $2,635 $2,475 $0 $0 $18,343 10.3%
SG&A: R&D $983 $0 $973 $973 $995 $114 $0 $0 $4,039 2.3%
Promotions $1,140 $1,140 $1,140 $1,140 $1,140 $1,140 $0 $0 $6,840 3.8%
Sales $1,000 $1,000 $1,900 $2,200 $900 $900 $0 $0 $7,900 4.4%
Admin $263 $564 $653 $518 $527 $376 $0 $0 $2,901 1.6%
Total Period $7,219 $7,458 $7,046 $7,098 $6,197 $5,005 $0 $0 $40,022 22.4%
Net Margin $906 $4,046 $5,990 $6,577 $3,725 $3,706 $0 $0 $24,950 14.0%

Production Information

City Core 1,829 300 12/7/2019 3.1 16000 10.4 9.6 $19.00 $8.14 $4.06 33% 39% 10.0 1,550 137%

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