Dreamland Pillow Company sells the Old Softy model for $20 each. One pillow needs two pounds of raw material as well as one hour of direct labour to manufacture. Raw material costs $3 per pound as well as direct production labour is paid $4 per hour. Fixed supervisory costs are $2000 per month as well as Dreamland rents its factory on a five-year lease for $4,000 per month. All costs are deliberated costs of production. How many pillows should Dreamland produce and sell each month to earn a monthly gross profit of $1,000?

Another firm has offered to produce ?"Old Softy" pillows and sell then to Dreamland for $12 each. Dreamland cannot avoid the factory lease payments, but can avoid all labor cost if it does not produce these pillows. Under these conditions, how many "Old Softy" pillows must Dreamland sell to earn montly gross profits of $1000?

(A.) 300 (b) 350 (c) 600 (d) 700