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French Meditrainian Welsh
Normal annual selling volume 100,000 200,000 300,000
Unit selling price $2.00 $1.40 $0.80
Variable cost per unit $1.20 $0.80 $0.50
Question 1: Of the total fixed costs of $282,000, $18,000 could be avoided if the French Carpet was dropped, $96,000 if the Meditrainian Carpet was dropped and $60,000 if the Welsh Carpet was dropped. The remaining fixed costs are common and are unavoidable unless the company went out of business. What is the break-even quantity and dollars of each product?
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