The BREAK-EVEN ANALYSIS

A company is considering a redesign to its existing production process. It will incur fixed costs of $10,500,000.00. The company estimates that the production process redesign will reduce the variable cost of production per unit from $15 to $14. The product sells for $20 per unit.

1. What quantity is required for the production process redesign to break-even?
2. If total demand for the product is estimated to be 2,000,000 units, what contribution to profit would the process re-design make?
3. Based on your break-even calculation, is this a good investment? Explain why or why not.
4. Show all work & calculations