TenAlpina is adding a new product line, which will add some new revenues and costs. Based on Guilia$$s estimates, and assuming that the volumes for piton production and sales do not change, how many wall hammers would TenAlpina Tools have to sell in order the same annual gross margin $($in dollars$)$ as it would have if only piton were sold? That is$,$ at what demand level for hammers would Guilia be indifferent $($from a total profitability point of view$)$ as to whether or not to add the new product line?

Table $1$

Volume

$50,400$

Revenue

$$529,200$

Materials

$$73,080$

Direct Labor

$$345,000$

Factory Overhead

Supplies

$$5,544$

Power

$$29,808$

Depreciation

$$14,355$

Occupancy

$$33,000$

Total Manufacturing costs

$$500,787$

Gross Margin

$$28,413$

$5\mathrm{.}4\%$

Exhibit $3$: Current and Estimated Cost and Revenue Data Current Results Average monthly piton demand Selling price per piton Annual worker labor cost $($fully$-$loaded, including benefits$)4,200$ units Annual machine and tool depreciation $($existing machines$)$ Annual occupancy cost $($including building lease$)$ Annual lighting$/$heating$/$utilities cost Direct material cost per piton Variable energy cost per piton Variable supplies cost per piton Annual administrative costs Estimated Information Increase in fixed utility costs due to new machine Material costs $($per hammer$)$ Utility costs per hammer Supply costs per hammer $$10\mathrm{.}50$ $ $57,500$ per worker $ $14,355$ $ $33,000$ $ $29,808$ $ $1\mathrm{.}45$ $ $0\mathrm{.}18$ $ $0\mathrm{.}11$ $ $7,200$ $$864$ $$10\mathrm{.}44$ $$0\mathrm{.}46$ $$0\mathrm{.}14$ BAB$278/$ MAY $2015$ Exhibit $2$: Depreciation Schedule, Including Estimate for Injection Molding Machine Subtotal Machine type Cold roll and cut Oven & drop$-$ forge Bore Deburr and polish Package Injection mold Total $($making just pitons$)$ Cost $$29,000$ $$88,000$ $$15,000$ $$9,000$ $$2,550$ $$143,550$ $$35,000$ $$178,550$ Life $1010101010-7$ $ $2,900$ $ $8,800$ $ $1,500$ $ $900$ $ $255$ $ $14,355$ $ $5,000$ $ $19,355$ Annual depreciation