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The following questions are based on Jenkins Quality Goods, a company that produces dress shirts for men. The company currently enjoys sales of 10,000 units, and they are sold to retailers at a price of $25 each. The cost of materials and labor to produce each shirt is $12.50 and the company has overhead costs of $45,000, which includes the cost of a long-term lease on the production facility. What is the break-even point for Jenkins in units and dollars? The company is considering a price cut to increase sales and to compete with foreign suppliers. The CEO, Malcolm, wants to consider cutting prices by 10%. How many more shirts would Jenkins need to sell to "break-even" on the price cut? There is good news, however. Malcolm thinks he has some room to cut prices by 10% due to a reduction in the cost of cotton, which is reducing his variable costs by $1 per unit. With this in mind, how much of an increase in sales is necessary for Malcolm to break even on the price cut and the reduction in variable costs?