Eaton Tool Company has fixed costs of $353,400, sells its units for $82, and has variable costs of $44 per unit.

a. Compute the break-even point.

break-even point __________units

b. Ms. Eaton comes up with a new plan to cut fixed costs to $280,000. However, more labor will now be required, which will increase variable costs per unit to $47. The sales price will remain at $82. What is the new break-even point? (Round your answer to the nearest whole number.)

nnew break-even point __________units

c. Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?

• Profitability will be less

• Profitability will be more