A manufacturer is considering incurring $60,000 in research and development costs in order to produce a more sensitive electronic thermostat. The materials and labor costs for the production and sale of this product are $1.60 per unit.
(a) Calculate the breakeven sales level for this product if it is priced at $2.20 per unit.
(b) Calculate the product’s breakeven sales level if it is priced at $4 per unit.
(c) Explain the implications of the difference between these two breakeven sales levels.