Sorrentino Company, which has been in business for one year, manufactures specialty Italian pastas. The pasta products start in the mixing department, where durum four, eggs, and water are mixed to fom dough. The dough is kneaded, rolled flat, and cut into fettucine or lasagna noodles, then dried and packaged. Paul Gilchrist, controller for Somentiro Company, is concemed because the company has yet to make a profit. Sales were slow in the fist quarter but really picked up by the end of the year. Over the course of the year, 717,500 boxes were sold. Paul is interested in determining how many boxes must be sold to break even. He has begun to determine relevant fixed and variable costs and has accumulated the following per unit data: Price $0.95 Direct materials 0.35 Direct labor 0.25 He has had more difficulty separating overhead into fived and variable components. In examining overhead-related activities, Paul has noticed that machine hour appear to be closely correlated with units in that 100 boxes of pasta can be produced per machine hour. Setups are important batch-level activity. Paul also thinks that indiect labor hour may be associated with the overhead experse, but there is no evidence showing the relation. Currently, indirect labor hour is scheduled to be 2000 hours per year. Paul has accumulated the following information on overhead costs, number of setups, machine hours, and indirect labor hours for the past 12 months. Overhead Number of Setups Machine Hours Indirect Labor Hours Month $5,700 January 595 155 February 4,500 560 135 March 12 125 4,890 575 April 615 200 5,500 15 680 6,320 20 May 240 June 5,100 10 183 552 July 5,532 630 205 12 August 5,409 115 September 5,300 635 11 162 12 525 October 4,950 145 November 5,350 593 14 185 615 December 5,600 14 150