Find the number of units sold

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Reference no: EM13265526

Dandle's Candles will be producing a new line of dripless candles in the coming years and has the choice of producing the candles in a large factory with a small number of workers or a small factory with a large number of workers. Each candle will be sold for $10. If the large factory is chosen, the cost per unit to produce each candle will be $2.24, while it will be $7.04 in the small factory. The large factory would have fixed cash costs of $2.2 million and a depreciation expense of $300,000 per year, while those expenses would be $560,000 and $100,000 in the small factory. Find the number of units sold where the pretax operating cash flow is the same whether the firm chooses the large or small factory.

Reference no: EM13265526

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