Sec-Tech Co. is a software corporation that is evaluating the production of a new hardware product for WID (wireless Intrusion Detection) and governmental agencies are their main customers. The capital cost of the new production plant is expected to be $7,500,000 with annual maintenance costs of 3% of capital. Other annual fixed costs include $185,000 for utilities, administrative salaries are $135,000 per year and insurance is expected to be $78,000. The plant will depreciate over 20 years with a salvage value of $950,000 (use straight line method). Other fixed costs are estimated to be $165,000 per year. Variable costs can be broken down into materials: SmartEdge sensor at $600 per device; a Power Injector at $270 per device and other materials at $978 per device; and direct labor at $23.5 per labor hour with fringe benefits estimated at 22% of the direct labor cost. Sec-Tech has run several forecast scenarios for different selling prices (based on the potential agencies that will become their customers) and the results are presented in the table below:

Average Sales Price ($/device)Sales (in units)$1,725.0010,000$1,900.009,000$2,005.007,500$2,105.006,250$2,300.005,500$2,700.004,750$2,825.003,875

Develop abreakeven capacity analysis for Sec-Tech's new device and determine:

1. Best price, production rate, and profit.
2. Breakeven production rate with the price determined in part a.
3. Breakeven price with the production rate determine in part a.
4. Sensitivity of profits to:i) a 25% increase (and decrease) in variable costs; ii) a 17% increase (and decrease) in the selling price; iii) an 8% increase (and decrease) in the production rate.