Salem Electronics currently produces two products: a programmable calculator and a tape recorder. A recent marketng study indicated that consumers would react favorably to a radio with the Salem brand name. Owner Kenneth Booth was interested in the possibility. Before any commitment was made, however, Kenneth wanted to know what the incremental fixed costs would be and how many radios must be sold to cover these costs. In response, Betty Johnson, the marketing manager, gathered data for the current products to help in projecting overhead costs for the new product. The overhead costs based on 30,000 direct labor hours follow. (The high-low method using direct labor hours as the independent variable was used to determine the fixed and variable costs.) The following activity data were also gathered: The following activity data were also gathered: and so on). Engineering also provided the following additional estimates for the proposed product line: had to be sold to break even. Since Betty was confident that 20,000 units could be sold, she was prepared to strongly recommend the new product line. 1. Reproduce Betty's break-even calculation using conventional cost assignments. Variable overhead rate: $ per direct labor hour Unit variable cost: $ Break-even: units How much additional profit would be expected under this scenario, assuming that 20,000 radios are sold? $ 2. Use an activity-based costing approach, and calculate the break-even point and the incremental profit that would be earned on sales of 20,000 units. In your computation for break-even point, round amounts to the nearest cent and round your final answer to the nearest whole unit. In your analysis assume that the expected engineering hours, inspection hours, and setups are realized and that depreciation is a fixed cost. Break-even point X units Incremental profit (loss) $ x