Luvmatics Plans to Produce a New Product -Use the Information in Table A

Multiple Choice

Luvmatics plans to produce a new product. Three different models are planned: the Regular, Large, and Jumbo. The fixed costs depend on which of two locations are used; in San Francisco the fixed costs would be $2.5 million per year, but in Tuttle the fixed costs would be $1.2 million. Sale prices and variable costs for the three models are shown in the table.
$$\begin{array} { | l | c | c | c | } \hline \text { Table A 1 } & & { \text { Model } } \\\hline \text { } & \text { Regular } & \text { Large } & \text { Jumbo } \\\text { Variable Cost} & \$ 5 \text { /unit }& \$ 7 \text { /unit } & \$ 10 / \text { unit } \\\text { Sale Price } & \$ 25 / \text { unit } & \$ 41 \text { /unit } & \$ 68 / \text { unit } \\\hline\end{array}$$
-Use the information in Table A.1.How many units of the Regular size must be sold each year to break even if production is at the San Francisco plant?

A) Fewer than 30,000 units
B) More than 30,000 units but fewer than 80,000 units
C) More than 80,000 units but fewer than 130,000 units
D) More than 130,000 units