A firm has the capacity to produce 1,000,000 units of a product each year. At present, it is operating at 70 percent of capacity. The firm’s annual revenue is \($700,000.\) Annual fixed costs are \($300,000,\) and the variable costs are \($0.50\) per unit.

a. What is the firm’s annual profit or loss?

b. At what volume of sales does the firm break even?

c. What will be the profit or loss if the plant runs at 90 percent of capacity assuming a constant income per unit and constant variable cost per unit?

d. At what percent of capacity would the firm have to run to earn a profit of \($90,000?