Exercise 3-7A (Algo) Cost-volume-profit relationship LO 3-2

Adams Corporation is a manufacturing company that makes small electric motors it sells for $36 per unit. The variable costs of production are $22 per motor, and annual fixed costs of production are $196,000.

Required

1. How many units of product must Adams make and sell to break even?

2. How many units of product must Adams make and sell to earn a $56,000 profit?

3. The marketing manager believes that sales would increase dramatically if the price were reduced to $34 per unit. How many units of product must Adams make and sell to earn a $72,800 profit, if the sales price is set at $34 per unit?