Here are the steps to solve this problem: 1) Break-even point calculation: - Direct production costs at 70% capacity = $280,000 - Fixed costs = $200,000 - Total costs = $280,000 + $200,000 = $480,000 - Sales at break-even = Total costs = $480,000 - Sales are $40 per unit - So units at break-even = $480,000 / $40 = 12,000 units 2) Gross earnings and net profit at 100% capacity: - Capacity = 14,000 units (12,000 units / 0.7 = 14,000 units at 100%) - Sales =