Existing Product	New Product
MSRP	$5.39	$4.99
Volume Discount	35%	35%
Unit Cost	$1.49	$1.49
Promotional Allowance	15%	20%
Advertising and Promotion	$25 Million	$20 Million
Allocated Fixed Costs	$68 M	$12 M
Projected Unit Sales	115M	10M

A firm has an existing product with a combined advertising and promotion budget of $25.0 million and with projected sales of 115 million units. They are launching a new product with a budget of $20.0 million and estimated sales of 10 million units in the first year. The sales force expense of $10 million has been allocated equally between products; 90% of the plant overhead has been allocated to the existing product, and 10%, to the new product. Additional values for each product are shown in the table above.

1. Production anticipates it will need to increase capacity to 140 million units, adding $10.0 million to annual fixed costs. If the product allocation of the plant cost is also changed to 80%/20%, what is the impact on break-even units? Please use the chart below to record your answer.

	Existing Product	New Prouct
Total Fixed Cost
Unit Selling Price
Unit Variable Cost
Beak-Even Units