Baldwin has negotiated a new labor contract for the next round that will affect

Question

Baldwin has negotiated a new labor contract for the next round that will affect the cost for their product Baker. Labor costs will go from $1.90 to $2.40 per unit. In addition, their material costs have fallen from $6.82 to $5.82. Assume all period costs as reported on Baldwin's Income Statement remain the same.    If Baldwin were to pass on half the new costs of labor and half the savings in materials to customers by adjusting the price of their product, how many units of product Baker would need to be sold next round to break even on the product?

A.759

B.874

C.1,047   

D.848

I used the formula of calculating the breakeven point of Q=F/(P-V) but still not getting the answer. Could you please tell me the answer for this question and also give me the explanation. Thank you.

Production Information 2nd Auto Shift & mation Capacity Unit Primary Units Inven Age Pfmn Size Material Labor Contr. Over- Next Next Plant Name Segment Sold tory Revision Date Dec.31 MTBF Coord Coord Price Cost Cost Marg. tie Round Round Utiliz Core 1,551 Nano1,431 Elite 1,275 am Thrift 1,625 0 12/19/2019 1.316000 12.1 8.0 $21.00 $8.62 $1.22 55% 4% 10.0 1,750 103% 4 12/18/2019 1.2 24000 14.8 3.1 $37.00 $13.54 $1.98 59% 29% 10.0 1,423 128% 0 12/8/2019 1.226000 17.3 5.3 $39.00 $14.20$1.92 60% 18% 10.0 1,394 117% 0 12/21/2019 1.620000 9.2 10.7 $16.00 S7.65$1.23 47% 7% 10.0 1,780 106% 994 441 12/20/2019 2.214000 9.3 10.7 $17.00 $6.82$1.90 52% 16% 10.0 1,250 115% Bead Core 1,866 213 12/7/2017 3.116000 10.2 9.8 $19.00 $8.14 $4.05 34% 40% 10.0 1,500 139% Nano 1,213 470 12/17/2019 1.018000 13.7 3.6 $30.00 $12.74 $7.35 31% 100% 7.0 1,050 198% 830 314 12/17/2019 1.020000 16.8 6.1 $36.00 $13.59 $6.47 43% 24% 7.0 1,000 122% Buddy Core 1,520 15 12/25/2019 0.916000 11.6 8.3 $21.00 S9.31 $5.49 31% 49% 8.0 1,040 148% 0 2/10/2019 0.916000 11.3 8.7 $22.00 S9.03 $4.41 38% 100% 8.0 1,040 176% Baker Thrift Bid Bold Bat Core 1,053 ke Nano 1,780 2 11/5/2019 1.2 23000 14.3 3.7 $34.00 $13.66 $7.91 39% 100% 7.0 1,150 198% Elite 1,330 235 8/24/2019 1.925000 17.1 5.7 $34.00 $14.56 $6.88 35% 71% 7.0 850 169% 7/3/2019 1.323000 14.8 3.2 $37.00 $14.04$7.64 38% 70% 7.0 1,250 168% Elite 1,507 521 7/25/2019 1.325000 16.9 5.4 $37.00 $14.57 $7.54 38% 61% 7.0 1,400 159% Nano,285 511 Thrift 1,935 144 Thrift 2,038 190 6/9/2020 3.717000 8.6 11.4 $16.00 S6.80 $2.89 38% 35% 10.0 1,550 134% 6/9/2020 3.617000 8.8 11.2 $16.00 S6.96 $2.84 37% 29% 10.0 1,750 127% Dome Core 1,641 389 12/16/2018 2.118000 11.7 7.7 $24.00 S9.72 $4.70 37% 86% 8.0 1,150 185% Core 1,827 302 12/18/2018 2.120000 12.4 8.2 $24.00 $10.36 $4.58 35% 65% 8.0 1,350 164% Dot COMP-XMD INQUIRER Page 4

Explanation / Answer

ans c is correct 1047

if the material cost has fallen from$ 6.82 to $5.82 that means we will increase our margin of profit through increase in sales of unit because as we seen in this question labour cost will go from $1.90 to 2.40 per unit that is .5 % increase per unit .

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