Reference no: EM13607177

The Printing Experts (TPE) prints elaborate, high-quality color brochures in its facility, located in Seattle, WA. It primarily serves businesses around Seattle. Production at its Seattle facility is running almost at full capacity. The company now produces 150,000 brochures a month. Ross Smith, who owns and manages the company, estimates full capacity to be 160,000 brochures a month. He employs one sales representative and one printing press operator, although he relies on temporary labor to help in the printing process as needed to accommodate any changes in printing volume. Smith believes that many of his costs are fixed, but that some costs vary with the number of brochures printed and sold. Presented below are TPE's monthly operating costs for the company's current level of 150,000 brochures a month.

Monthly costs at 150,000 volume
Manufacturing costs:
Direct material, variable $ 6,000
Direct labor, variable 1,500
Direct labor, fixed 3,000
Manufacturing overhead, variable 1,500
Manufacturing overhead, fixed 3,375
Total manufacturing costs $ 15,375

Nonmanufacturing costs:
Sales, variable $ 1,500
Sales, fixed 1,875
Corporate, fixed 3,750
$ 7,125

The company typically prices its printing services at an average of $18 per 100 brochures printed, or $0.18 per brochure printed. (Note that although industry practice is to describe prices "per 100 brochures," jobs are not always printed in 100 unit lots and prices are per unit. For example, at a price of $18 per hundred, the price of a job to print 51 brochures would be $9.18.) Historically, Smith has encountered little variation in pricing from job to job, although occasionally special situations do arise.Compute the breakeven point (in number of brochures) for TPE.