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Question: A manufacturing company is studying the feasibility of producing a new product. A new production line could manufacture up to 800 units per month at a cost of $50 per unit. Fixed costs would be $22,400 per month. Variable selling and shipping costs are estimated to be $20 per unit. Market research indicates that a unit price of $110 would be competitive. 1. What is the break-even point as a percent of capacity? 2. What would be the net income at 90% of capacity? 3. What would unit sales have to be to attain a net income of $9000 per month? 4. In a serious recession sales might fall to 55% of capacity. What would be the resulting net income? 5. What dollar amount of sales would result in a loss of $2000 per month? 6. In the highest-cost scenario, fixed costs might be $25,000, production costs might be $55 per unit, and selling and shipping costs might be $22 per unit. What would the break-even point be in these circumstances? Solution