Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cedar. Labor costs will go from $2.02 to $2.52 per unit. Assume all period and variable costs as reported on Chester's Income Statement remain the same. If Chester were to pass on half the new labor costs to their customers, how many units of product Cedar would need to be sold next round to break even on the product?

Select: 1

	1,000
	880
	937
	907

Annual Report Chester C59559 Round: 3 Dec. 31, 20221 (Product Name:) Sales Na Cedar $16,157 Cid $34,471 2022 Income Statement Coat Cure Camp Cent $36,575 $34,800 $32,314 $23,054 Na $0 2022 Common Total Size $177,372 100.0% $0 Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $1,920 $5,631 $652 $8.203 $7,661 $15,247 $702 $23.610 $8.522 $15,125 $502 $24,149 $6,549 $12,817 $528 $19,894 $8.742 $13.785 $167 $22.694 $4,702 $9.734 9 $14.444 $0 so SO $O SO $0 SO SO $38,096 $72,340 $2,559 $112.994 21.5% 40.8% 1.4% 63.7% Contribution Margin $7.954 $10.861 $12.426 $14.906 $9.620 $8.610 SO SO $64.378 36.3% Period Costs: Depreciation SG&A: R&D Promotions Sales Admin Total Period $3.833 $983 $1,140 $1,000 $224 $7.180 S5,113 SO $1,140 $1,000 $477 $7.730 $2,215 $973 $1,140 $1,900 $506 $6.735 $2,086 $973 $1,140 $2,200 $482 $6,881 $2,600 $995 $1,140 $900 $447 $6,083 $2.444 $114 $1,140 $900 $319 $4.917 SO $0 SO SO SO SO SO SO SO SO SO SO $18.291 $4.039 $6,840 $7.900 $2,455 $39.525 10.3% 2.3% 3.9% 4.5% 1.4% 22.3% Net Margin $774 $3,131 $5,691 $8,025 $3.538 $3,693 SO SO $24.853 14.0% 4.6% 9.4% 2.1% 7.6% -0.1% 0.0% -0.2% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Other $8,102 Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D EBIT $16.751 department expenditures for each product. Admin: Administration overhead is estimated at 1.5% Short Term Interest $3.748 of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for Long Term Interest $13.539 each product. Other: Charges not included in other categories such as Fees, Write Offs, and Taxes ($188) TOM. The fees include money paid to investment bankers and brokerage firms to issue new Profit Sharing SO stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Net Profit ($349) might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on Variable Margins the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term 2008 Chester Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on 40.0% outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit 30.0% sharing. 20.0% 10.0% 0.0% Im PIO Cedar Coat Cure Camp Annual Report Chester C59559 Round: 3 Dec. 31, 20221 (Product Name:) Sales Na Cedar $16,157 Cid $34,471 2022 Income Statement Coat Cure Camp Cent $36,575 $34,800 $32,314 $23,054 Na $0 2022 Common Total Size $177,372 100.0% $0 Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $1,920 $5,631 $652 $8.203 $7,661 $15,247 $702 $23.610 $8.522 $15,125 $502 $24,149 $6,549 $12,817 $528 $19,894 $8.742 $13.785 $167 $22.694 $4,702 $9.734 9 $14.444 $0 so SO $O SO $0 SO SO $38,096 $72,340 $2,559 $112.994 21.5% 40.8% 1.4% 63.7% Contribution Margin $7.954 $10.861 $12.426 $14.906 $9.620 $8.610 SO SO $64.378 36.3% Period Costs: Depreciation SG&A: R&D Promotions Sales Admin Total Period $3.833 $983 $1,140 $1,000 $224 $7.180 S5,113 SO $1,140 $1,000 $477 $7.730 $2,215 $973 $1,140 $1,900 $506 $6.735 $2,086 $973 $1,140 $2,200 $482 $6,881 $2,600 $995 $1,140 $900 $447 $6,083 $2.444 $114 $1,140 $900 $319 $4.917 SO $0 SO SO SO SO SO SO SO SO SO SO $18.291 $4.039 $6,840 $7.900 $2,455 $39.525 10.3% 2.3% 3.9% 4.5% 1.4% 22.3% Net Margin $774 $3,131 $5,691 $8,025 $3.538 $3,693 SO SO $24.853 14.0% 4.6% 9.4% 2.1% 7.6% -0.1% 0.0% -0.2% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Other $8,102 Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D EBIT $16.751 department expenditures for each product. Admin: Administration overhead is estimated at 1.5% Short Term Interest $3.748 of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for Long Term Interest $13.539 each product. Other: Charges not included in other categories such as Fees, Write Offs, and Taxes ($188) TOM. The fees include money paid to investment bankers and brokerage firms to issue new Profit Sharing SO stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you Net Profit ($349) might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on Variable Margins the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term 2008 Chester Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on 40.0% outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit 30.0% sharing. 20.0% 10.0% 0.0% Im PIO Cedar Coat Cure Camp