Aulas Calientes SA distributes in the United States water pumps made in México. The company is considering changing its pricing to become more competitive after passage of CAFTA, the Central American Free Trade Agreement lowered U.S. tariff barriers for Central American products.
The company’s cost accountant has prepared the following budget for the month of February:
Product, Selling Price Per Unit, Variable Cost Per Unit, Unit Sales (numbers below are respectively)
A $7.81 $4.44 23,531
B $3.23 $1.20 28,939
C $4.55 $3.24 34,634
The cost accountant tells the working capital manager that total fixed operating costs will be $383,686 and the mix of products produced and sold will remain constant. Further analysis reveals that non-cash fixed operating costs (primarily depreciation expense) are $175,622.
Calculate the number of units of total output the company must produce to breakeven on a cash basis.
***i came up with 98,823 but it is not correct!!! please show me the steps of how you do it...thank you