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.