Upon

graduating, Jenn Sawyer managed to secure some venture capital and purchased an old factory from her grandfather for

$$2,250,000,$ with an expected salvage value of $$250,000$ and a useful life of $25$ years. They are considering two lines of

products: Office Furniture and Living Room Furniture. They envision their start product to be in the Living Room line:

As part of its senior project, Mr$.$ Usher came up with the ModernWest chair, manufactured of solid oak wood and with an

ergonomic design. The prototype has won two engineering design awards. However, they are also considering the

MidVision conference table, manufactured with engineered wood and with a design that appeals to small businesses

across the nation $($according to their market research$).$ Jenn Sawyer, the business management graduate, is trying to figure

out the break$-$even level for monthly sales for each product to then make a decision regarding what entry product would

yield the best results for the company. After carefully reviewing their books, the following classification of the expenses

for the planned Midwest factory has been identified:

Fixed Costs

Depreciation $($use straight line method$)$

Property taxes $$5,250\mathrm{.}00$

Utilities $($including the customer service line$)$ $$160,500\mathrm{.}00$

Insurance $$95,000\mathrm{.}00$

Advertising $$45,500\mathrm{.}00$

General office salaries $$65,000\mathrm{.}00$

General maintenance $(2\mathrm{.}5\%$ of capital cost$/$yr$)$

Other costs $$27,500\mathrm{.}00$

Variable costs $($per chair$)$

Oak Wood $$165\mathrm{.}00$

Hardware $$78\mathrm{.}00$

Fabric $$75\mathrm{.}00$

Finishing $$26\mathrm{.}50$

Direct labor $$42\mathrm{.}50$

Fringe $($at $15\mathrm{.}5\%)$

Billing$/$Shipping costs $$12\mathrm{.}50$

Variable costs $($per table$)$

Engineered Wood $$5$

$8\mathrm{.}50$

Hardware $$42\mathrm{.}50$

Fabric $$28\mathrm{.}00$

Finishing $$15\mathrm{.}00$

Direct labor $$23\mathrm{.}50$

Fringe $($at $15\mathrm{.}5\%)$

Billing$/$Shipping costs $$12\mathrm{.}50$

After a detailed forecasting analysis, the following scenarios for price points and annual sales for the Midwest sales point

$($located close to their factory$)$ have been estimated for each product:

Chair Projections

Sale Price Area Sales

$$1,116\mathrm{.}00800$

$$957\mathrm{.}001,150$

$$861\mathrm{.}001,400$

$$725\mathrm{.}001,680$

$$585\mathrm{.}001,950$

Table Projections

Sale Price Area Sales

$$790\mathrm{.}00950$

$$722\mathrm{.}001,150$

$$657\mathrm{.}001,300$

$$585\mathrm{.}001,550$

$$475\mathrm{.}002,100$