The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow:

Sales of 15,000 units	$ 150,000
Variable expenses	120,000
Contribution margin	30,000
Fixed expenses	40,000
Net operating loss	$ (10,000)

If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.

Assuming all other conditions stay the same, at what level of annual sales of Doombugs (in units) should Draper be indifferent between discontinuing Doombugs or continuing the production and sale of Doombugs?

Multiple Choice

• 4,000 units

• 20,000 units

• 6,000 units

• 18,000 units