Using budget data, how many motors would have to be sold for Waltham Motors Division to break even?

Back ground:

1. There were no beginning and ending inventories in work in progress or finished goods.

2. Per unit standard costs used in budgeting this year were:

Direct material $ 6

Direct labor 16

3. We are still using two hours per unit as standard labor time. 4. Actual material prices have been 5% less than expected.

5. Actual direct labor costs have been $8.20 per hour due to the increase in medical benefits granted last January. A copy of the performance report is shown as Exhibit 1.

Exhibit 1 Performance Report, May 2004 Budget Actual Variance Units 18,000 14,000 4,000 Sales $864,000 $686,000 $178,000 U Variable manufacturing costs: Direct material $108,000 $ 85,400 $ 22,600 Direct labor 288,000 246,000 42,000 Indirect labor 57,600 44,400 13,200 Idle time 14,400 14,200 200 Cleanup time 10,800 10,000 800 Miscellaneous supplies 5,200 4,000 1,200 C n n T TTT TTT Total variable manufacturing cost $484,000 $404,000 $ 80,000 Variable shipping costs $ 28,800 $ 28,000 800 Total variable costs $512,800 $432,000 $ 80,800 Contribution margin $351,200 $254,000 $ 97,200 Nonvariable manufacturing costs: Supervision $ 57,600 $ 58,800 $ 1,200 U Rent 20,000 20,000 Depreciation 60,000 60,000 Other 10,400 10,400 Total nonvariable manufacturing costs $148,000 $149,200 $ 1,200 U Selling and administrative costs 112,000 1 12,000 Total nonvariable and programmed costs $260,000 $261.200 $ 1.200 C C Operating income (loss) 91,200 (7,200) (98,400)