Ensco Lighting Company has fixed costs of $266,600, sells its units for $68, and has variable costs of $37.00 per unit.

a. Compute the break-even point.

Break-even point units

b. Ms. Watts comes up with a new plan to cut fixed costs to $210,000. However, more labour will now be required, which will increase variable costs per unit to $40. The sales price will remain at $68. What is the new break-even point? (Do not round intermediate calculations. Round the final answer to the nearest whole number.)

New 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)?

multiple choice

• Profitability will be less.

• Profitability will be more.