Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

102,400 $ 1.65 Metal 204,800 $ 1.50 Nylon 409,600 $ 0.85 $0.40 Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in

image text in transcribed
image text in transcribed
image text in transcribed
102,400 $ 1.65 Metal 204,800 $ 1.50 Nylon 409,600 $ 0.85 $0.40 Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Velcro Annual sales volume Unit selling price Variable expenne per unit $ 1.25 $ 0.70 $ 0.25 Contribution margin per unit $ 0.80 $ 0.60 Total fixed expenses are $409,600 per perlod. Of the total fixed expenses, $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 $249,600 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 The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point unlt sales: Method #t Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base, Method 12. Only include each product's traceable fixed costs in the numerator of each break-even calculation. 4a. Calculate the break-even point in unit sales for each product using method 2. 4b. If the company sells exactly the break-even quantity of each product what will be the overall profit for the company using method 2? 4a. Velcro's Break-even point in units 4a. Motal's Break-even point in nits 4a. Nylon's Break-even point in units 4b. Overall profit (loss) Which method should the company use to calculate each product's break-even point in unit sales? O Method 1 O Method 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting For Managerial Planning Decision Making And Control

Authors: Woody Liao, Andrew Schiff, Stacy Kline

6th Edition

1516551702, 9781516551705

More Books

Students also viewed these Accounting questions

Question

2. Use different groups for different subjects.

Answered: 1 week ago

Question

Identify and discuss learning style differences across cultures

Answered: 1 week ago