1. Dannys Diamonds makes synthetic diamonds. Each diamond can be sold for $100. The materials cost $30 for a standard diamond. The fixed costs incurred each year for factory upkeep and administrative expenses are $200,000. The machinery costs $1 million and is depreciated over a straight line over 10 years to a salvage value of zero.

What is the accounting break-even level of sales in terms of number of diamonds sold?

1. 3,560
2. 4,286
3. 5,676
4. 6,104