MFG Manufacturing sells a product for $40 per unit. The production cost of the product is $21 per unit: direct materials of $8, direct labor of $7, variable overhead of $4 and fixed overhead of $2. The fixed overhead per unit comes from dividing $500,000 of fixed factory overhead by 250,000 units produced. In addition, MFG pays $3 for shipping each unit sold. Finally, MFG has fixed costs outside the factory (such as office building depreciation and salaries) that total $200,000 per year.

Breakeven in units is:

9,091

10,527

11,112

12,500

38,889

38889 is the correct answer, but I am not sure how to calculate. Please provide an explanation. Thank you!