Question: A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.

1. What volume per month is required in order to break even?
2. What profit would be realized on a monthly volume of (1) 61,000 units? (2) 87,000 units?
3. What volume would be needed to obtain a profit of $16,000 per month?

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