What is the break-even point in unit sales for each product

Assignment Help Financial Accounting

Reference no: EM132539271

Paul picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: "Wes, I'm not sure how to go about answering the questions that came up at the meeting with the president yesterday."

"What's the problem?"

"The president wanted to know the break-even point for each of the company's products, but I am having trouble figuring them out."

"I'm sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomor- row morning at 8:00 sharp in time for the follow-up meeting at 9:00."

Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below:

Velcro Metal Nylon

Normal annual sales volume . . . . . . . . 100,000 200,000 400,000

Unit selling price . . . . . . . . . . . . . . . . . . $1.65 $1.50 $0.85

Variable expense per unit . . . . . . . . . . $1.25 $0.70 $0.25

Total fixed expenses are $400,000 per year.

All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers.

The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished goods inventories.

Required:

Problem 1. What is the company's over-all break-even point in dollar sales?

Of the total fixed expenses of $400,000, $20,000 could be avoided if the Velcro product is dropped, $80,000 if the Metal product is dropped, and $60,000 if the Nylon product is dropped. The remaining fixed expenses of $240,000 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely. What is the break-even point in unit sales for each product?

Reference no: EM132539271

Questions Cloud

Project management planning assignment : Project management planning Assignment - challenge in the UAE and gather as much information as possible

Determine the percentage of total assets : Prat Corp. started the 2018 accounting period with $31,000 of assets (all cash), Determine the percentage of total assets

Concept of union-management partnership : Critically analyse the concept of union-management partnership, how does it work, what are its benefits and how can the Pacific Island Countries benefit

Explain the concept of a knowledge worker : The term "knowledge worker" was first coined by management consultant and author Peter Drucker in his book, The Landmarks of Tomorrow (1959). Drucker defined.

What is the break-even point in unit sales for each product : Rent on the factory building that could be avoided only by going out of business entirely. What is the break-even point in unit sales for each product?

Identify the challenges walmart : Identify the challenges Walmart need to overcome affecting their implementation of international strategy.

Case one of company plane crashes : In case one of your company's Plane crashes, how will you manage the situation to maintain your company's good will? Explain this sir kindly

What consideration should sprockets unlimited consider : What consideration should Sprockets Unlimited consider before doing so? Could the United States not allow Sprockets Unlimited to do business in this country?

Examine connection between ebp and the quadruple aim : Healthcare organizations continually seek to optimize healthcare performance. For years, this approach was a three-pronged one known as the Triple Aim.

User Account

All Pages