You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows:

Cost StructureAlternative 1Alternative 2Selling price per unit$ 100$ 100Variable cost per unit8580Short-term fixed costs per year100,000105,000

Required:

1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?

2. Suppose your profit goal for the coming year is 5% of sales (i.e., operating profit/sales = 5%). What sales level in units is needed under each alternative to achieve this goal?