Problem $1$: Breakeven Problem with changes in Cost Structure

Joseph runs a company that makes camp chairs. Total fixed costs are $$350,000.$ The company

sells the chairs for $$110$ each. They have the following variable costs per chair:

Required:

Calculate the breakeven in dollars.

If the company's sales increase by $4,000$ chairs, how much should net operating

income increase?

Using breakeven analysis, determine if the company should outsource making the chairs

based on the following information. A large overseas manufacturer has offered to produce

the chairs for $$60\mathrm{.}00$ each. ALL variable direct material, direct labor and overhead costs

will be eliminated. Selling costs though will increase by a shipping fee of $$2\mathrm{.}00$ per unit. In

addition, fixed costs will drop by $$150,000.$ The quality and the sales price will stay the

same. Should the company continue producing the chairs themselves or should they accept

the overseas company's offer? $($Ignore all other factors that could play into this decision$).$