Chester has a new design for their product Cozy 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 $4.20 - 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 Cozy would need to be sold next round to break even on the product.

Annual Report

Balance Sheet

DEFINITIONS: Common Size: The common size column simply represents each item as a percentage of total assets for that year. Cash: Your end-of-year cash position. Accounts Receivable: Reflects the lag between delivery and payment of your products. Inventories: The current value of your inventory across all products. A zero indicates your company stocked out. Unmet demand would, of course, fall to your competitors. Plant & Equipment: The current value of your plant. Accum Deprec: The total accumulated depreciation from your plant. Accts Payable: What the company currently owes suppliers for materials and services. Current Debt: The debt the company is obligated to pay during the next year of operations. It includes emergency loans used to keep your company solvent should you run out of cash during the year. Long Term Debt: The company's long term debt is in the form of bonds, and this represents the total value of your bonds. Common Stock: The amount of capital invested by shareholders in the company. Retained Earnings: The profits that the company chose to keep instead of paying to shareholders as dividends.

ASSETS			2024	2023
			Common Size
Cash	$34,151		20.1%	$33,502
Accounts Receivable	$17,852		10.5%	$14,680
Inventory	$19,220		11.3%	$20,509
Total Current Assets		$71,223	41.8%	$68,691
Plant & Equipment	$159,260		93.5%	$124,760
Accumulated Depreciation	($60,221)		-35.4%	($49,604)
Total Fixed Assets		$99,039	58.2%	$75,156
Total assets		$170,263	100%	$143,847
LIABILITIES & OWNERS' EQUITY
Accounts Payable	$10,744		6.3%	$10,779
Current Debt	$20,421		12%	$32,209
Long Term Debt	$38,918		22.9%	$28,334
Total Liabilities		$70,083	41.2%	$71,322
Common Stock	$9,674		5.7%	$9,790
Retained Earnings	$90,506		53.2%	$62,734
Total Equity		$100,180	58.8%	$72,524
Total Liab. & O. Equity		$170,263	100%	$143,847

Cash Flow Statement

The Cash Flow Statement examines what happened in the Cash Account during the year. Cash injections appear as positive numbers and cash withdrawals as negative numbers. The Cash Flow Statement is an excellent tool for diagnosing emergency loans. When negative cash flows exceed positives, you are forced to seek emergency funding. For example, if sales are bad and you find yourself carrying an abundance of excess inventory, the report would show the increase in inventory as a huge negative cash flow. Too much unexpected inventory could outstrip your inflows, exhaust your starting cash and force you to beg for money to keep your company afloat.

Cash Flow Summary Digby

Bar chart with 4 data series.

The chart has 1 X axis displaying categories.

The chart has 1 Y axis displaying values. Range: -40000 to 60000.

Cash Flow Summary DigbyOperationsInvestmentFinanceChg. Cash-40k-20k020k40k60k

End of interactive chart.

Cash Flows from Operating Activities:	2024	2023
Net income (Loss)	$28,518	$15,986
Depreciation	$10,617	$8,317
Extraordinary gain/losses/writeoffs	$0	$0
Accounts Payable	($35)	$3,180
Inventory	$1,289	($14,769)
Accounts Receivable	($3,173)	($1,763)
Net cash from operations	$37,216	$10,950
Cash Flows from Investing Activities:
Plant Improvements	($34,500)	($30,800)
Cash Flows from Financing Activities:
Dividends paid	$0	$0
Sales of Common Stock	$0	$988
Purchase of Common Stock	($863)	$0
Cash from long term debt	$10,584	$18,781
Retirement of long term debt	$0	($11,300)
Change in current debt (net)	($11,788)	$18,256
Net cash from financing activities	($2,067)	$26,724
Net change in cash position	$649	$6,875
Closing cash position	$34,151	$33,502