Ensco Lighting Company has fixed costs of $393,600, sells its units for $88, and has variable costs of $47.00 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 $310,000. However, more labour will now be required, which will increase variable costs per unit to $50. The sales price will remain at $88. 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.