Quiz 4: Cost-Volume-Profit Relationships

Jeff Merchandisers (JM)has determined with 100 percent certainty the following costs for making one unit of its only product: The company is,however,not sure of the behaviour of its total indirect manufacturing costs (that is,manufacturing overhead).The controller therefore ran a simple regression based on 20 pairs of monthly observations and obtained the following results: Y represents total monthly manufacturing overhead costs while X represents total monthly manufacturing direct labour costs. Required: Assume JM incurs NO selling and administrative expenses.What is your best estimate of the company's monthly breakeven sales in units at a guaranteed selling price of $20.00 per unit?