Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cid. 

Labor costs will go from $1.80 to $2.40 per unit. Assume all period and other variable costs remain the same. 

If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many 

units of product Cid would need to be sold next round to break even on the product?

Select: 1

	887
	856
	1,051
	922

Annual Report

Chester

C59559

Round: 3 Dec. 31, 2019

2019 Income Statement

(Product Name:)	Cid	Coat	Cure	Camp	Cent	Clack	Na	Na	2019 Total	Common Size
Sales	$16,975	$36,215	$35,108	$29,197	$33,825	$23,167	$0	$0	$174,487	100.0%
Variable Costs:
Direct Labor	$1,883	$7,924	$7,940	$5,107	$9,220	$4,692	$0	$0	$36,766	21.1%
Direct Material	$6,007	$16,074	$14,525	$10,765	$14,430	$9,782	$0	$0	$71,582	41.0%
Inventory Carry	$305	$442	$406	$454	$215	$0	$0	$0	$1,821	1.0%
Total Variable	$8,194	$24,440	$22,871	$16,326	$23,865	$14,474	$0	$0	$110,169	63.1%
Contribution Margin	$8,780	$11,775	$12,237	$12,871	$9,960	$8,694	$0	$0	$64,318	36.9%
Period Costs:
Depreciation	$3,833	$4,855	$2,147	$2,142	$2,664	$2,442	$0	$0	$18,083	10.4%
SG&A: R&D	$983	$0	$973	$973	$995	$114	$0	$0	$4,039	2.3%
Promotions	$1,140	$1,140	$1,140	$1,140	$1,140	$1,140	$0	$0	$6,840	3.9%
Sales	$1,000	$1,000	$1,900	$2,200	$900	$900	$0	$0	$7,900	4.5%
Admin	$220	$468	$454	$378	$437	$300	$0	$0	$2,257	1.3%
Total Period	$7,176	$7,463	$6,614	$6,833	$6,137	$4,895	$0	$0	$39,118	22.4%
Net Margin	$1,605	$4,312	$5,624	$6,039	$3,823	$3,799	$0	$0	$25,200	14.4%

Production Information

Name	Primary Segment	Units Sold	Unit Inven tory	Revision Date	Age Dec.31	MTBF	Pfmn Coord	Size Coord	Price	Material Cost	Labor Cost	Contr. Marg.	2nd Shift & Over- time	Auto mation Next Round	Capacity Next Round	Plant Utiliz.
Cid	Thrift	999	321	12/20/2019	2.2	14000	9.3	10.7	$17.00	$6.82	$1.80	52%	0%	10.0	1,250	91%
Coat	Core	1,906	292	12/7/2017	3.1	16000	10.2	9.8	$19.00	$8.14	$4.12	33%	43%	9.9	1,597	142%
Cure	Nano	1,170	176	12/17/2019	1.0	18000	13.7	3.6	$30.00	$12.74	$6.83	35%	41%	7.0	947	140%
Camp	Elite	811	193	12/17/2019	1.0	20000	16.8	6.1	$36.00	$13.59	$6.16	44%	6%	7.0	945	105%
Cent	Core	1,611	122	12/25/2019	0.9	16000	11.6	8.3	$21.00	$9.31	$5.72	29%	68%	7.6	1,098	167%
Clack	Core	1,053	0	2/10/2019	0.9	16000	11.3	8.7	$22.00	$9.03	$4.46	38%	100%	8.0	1,027	176%

Answer rating: 100% (QA)

Solution How many units of product Cid would need to be so... View the full answer