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

Question

Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cure. Labor costs will go from $2.94 to $3.54 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Cure would need to be sold next round to break even on the product?

Select: 1

1,435

1,587

1,507

2,262

Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cure. Labor costs will go from $2.94 to $3.54 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Cure would need to be sold next round to break even on the product?

Select: 1

1,435

1,587

1,507

2,262

2nd Auto Shin & mation capachy Unit PEmn Sire Primary Units Inven Material Labor Contr, Over. Next Next Plant Name Segment sold tory Revision Date Dec31 MTBF Coord Coord Price Cost Cost Marg. time Round Round Utlz

Explanation / Answer

Initially 2149 units were sold, now due to higher wages the margin has gone down, so the sales volume wil have to be increased to compensate for the same; Hence number of units sold > 2149 which is only d) 2262 as per the options

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