1. A company produces 1500 units at a variable cost of $300 per unit. The selling price is $500 per unit and there are fixed expenses of $10,000 per month. Calculate Break-even point in terms of both units and sales.

2. The local nonprofit youth symphony is planning a concert fundraiser. The organization estimates that 550 tickets can be sold for $16 per person. The fixed costs are $720. The local chamber of commerce office will process ticket orders for a fee of $4 per ticket, to relieve the youth symphony of this responsibility.

(1) How many tickets does your organization have to sell to break even? (2) How much must your organization have in sales dollars to break even (rounded to the nearest cent)?

True or False?

A. Total fixed costs change with changes in volume of activity.

B. The contribution margin income statement is used for internal reporting purposes and presents the fixed and variable components of cost information.

C. Examples of variable costs include factory building insurance and wages for hourly workers.

D. A process costing system is used by companies that produce similar or identical units of product.

E. Both process costing and job costing typically include three product costs direct materials, direct labour, and manufacturing overhead.