Reference no: EM132940461

Bano Industries

Bano Industries, a small scale manufacturer of car parts in Fiji is engaged in the manufacture of electronic components for use in cars. The management accountant of Bano Industries predicts that fixed costs associated with the manufacture of these electronic components will be $95,000; the unit variable cost will be $1100 and the unit selling price will be $1,400. Besides Bano will not accept any order that has a return on sales of less than 30 percent. The management accountant of Bano predicts that $55,000 can be classified as either fixed or variable. Bano intends to use this information to make a decision whether to accept or decline the contract- and this will be established based on the break-even point.

Calculate the break-even point. Of what value is break even analysis to the management accountant of Bano Industries? Explain.