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Zinc Energy Resources Co., a new division of a major battery manufacturing company, recently patented a new battery that uses zinc-air technology. The unit costs for the zinc- air battery are as follows: The battery housing is $6, materials are $7.25, and direct labor is $6.75 per unit. Retooling the existing factory facilities to manufacture the zinc-air batteries amounts to an additional $1.4 million in equipment costs. Annual fixed costs include sales, marketing, and advertising expenses of $1.8 million; general and administrative expenses of $1.1 million; and other fixed costs totaling $2.8 million.
Please answer the following questions.
a. What is the total per-unit variable cost associated with the new battery?
b. What are the total fixed costs for the new battery?
c. If the price for the new battery was set at $34, what would the breakeven point be?
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