Reference no: EM13747225
Boston's Dairy has just opened its main yogurt factory in upstate Massachusetts. The main factory can produce 3,500 boxes of yogurt monthly (each box contains 12 6oz cups), Due to overwhelming demand for the company's product, Boston's Dairy has signed a contract to rent a new factory, which can produce up to 8,000 boxes per month. The monthly total fixed costs are $40,000 in the main factory and $18,000 in the new factory. The variable production cost in the new factory is $6.00 per box as materials have to be redistributed from the main factory. The average selling price is $15, and the variable selling expense is $1 per box , which is the same for all factories.
In addition, Boston's Dairy plans to pay its sales force $0.80 per box as an added bonus for every box sold above the breakeven point.
Question: How many boxes does the company have to produce and sell in order to earn a net operating income of $10,000 per month? (Round all decimal up to one box)
A) 11,500 B) 4,233 C) 1,389 D) 6,344 E) 7,983
Please show detailed help and answer.
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