The company plans to develop a new product: an ottoman with multiple storage compartments. The sales & marketing team has projected a demand of3,000 units per month at a selling price of $440. The company estimates each ottoman will cost $232 to produce. The additional facility costs will be $40,000 per month, interest on a loan will be $6,000 per month, and other fixed costs are expected to be $80,000 per month.

Determine how many ottomans need to be sold to break-even. Will the company make money on this new product if it sells 3,000 units?

Price Per Unit
Variable Costs
Fixed Costs
Break-Even Point

Calculate the number of sales per month (i.e.,the number of ottomans and total dollar amount) the company will need to make in order to break even.

Synthesize the results of your calculations to determine the feasibility of the company to make a profit based on the sales & marketing projections and recommend solutions to the management team that would help to ensure profitability for the ottoman project.

Summarize how understanding and utilizing break-even analysis can impact managerial decision making.