Question;Assuming P&S Manufacturing is considering adding another product line - molded doors (keeping the cabinet production constant at 1,800 units). How many units should the company sell to make adding the additional line economically feasible/attractive? Adding this line will require hiring a different type of worker which costs the company $15/hour. P&S Manufacturing estimated each unit takes 10 hours of labor, and $850 direct materials. This line is estimated to incur additional fixed MOH $425,000 for the year, and variable costs/expenses per unit are the same as the cabinet product line. This product line does not add additional fixed period costs, but shares the fixed period costs with the cabinetry line. The company estimated sales price of a set of doors would be $1,850.

Related Information;

The following information highlights P&S Manufacturing's cost structure for 2020.

The materials include $2,800 for the wood and other materials on a per job basis.

It requires 24 hours of labor on average for the cabinetry.The hourly rate is $11.

The sales price will be set at a markup of 80%.

The company estimates that it will have 43,200 direct labor hours in total for the cabinets.

It assumes 1800 units are sold on average per year.

A breakdown of estimated yearly costs related to the cabinetry follows:

Salaries- office & administrative

$ 500,000

Salaries for factory personal

$ 350,000

Office Rent

$ 150,000

Factory Rent

$ 30,000

Office utilities and Misc office expenses(based on units sold)

$ 15,000

Sales travel(based on units sold)

$ 24,000

Insurance - office

$ 12,000

Depreciation - office equipment

$ 40,000

Depreciation for factory equipment

$ 70,000

Advertising

$ 20,000

Sales commissions(based on units sold)

$ 50,000

Factory Property taxes

$ 25,000

Maintenance for factory equipment

$ 80,000