Case Study 6: Company PQR's Product Analysis and Break-Even Point Calculation Introduction: You are a team of management accounting consultants, and you have been hired by Company PQR, a manufacturing company, to analyze their product offerings and calculate the break-even points for each product. Company PQR produces and sells multiple products, and they are interested in understanding the financial implications of their product mix. Your task is to analyze the given information, calculate the break-even points, and provide recommendations to the company based on your analysis. Product Assortment: - Product V: - Selling price per unit: $40 - Variable cost per unit: $25 - Sales volume: 8,000 units - Product W: - Selling price per unit: \$75 - Variable cost per unit: $50 - Sales volume: 4,500 units - Product X : - Selling price per unit: $130 - Variable cost per unit: $80 - Sales volume: 2,500 units Fixed Costs: $600,000 per year Assignment Instructions: 1. Break-Even Point Calculation: a. Calculate the break-even point (in units) and sales revenue (in dollars) for the company. b. Prepare a break-even income statement, showing sales, variable costs, contribution margin, and fixed costs. 2. Contribution Margin Analysis: a. Calculate the contribution margin ratio for each product. b. Analyze and compare the contribution margin ratios of the products. c. Identify the product with the highest contribution margin ratio and explain its significance to the company. 3. Margin of Safety Analysis: a. Calculate the margin of safety (in dollars) and as a percentage for the overall company. b. Discuss the implications of the margin of safety results for Company PQR's risk and profitability. 4. Sensitivity Analysis: a. Analyze the impact of a 12% increase in fixed costs on the break-even points and the overall break-even point. b. Discuss the implications of the sensitivity analysis results for the company's profitability and risk. 5. Special/New Project Analysis: Company PQR is considering a special project to introduce a product line expansion. The project will incur an additional fixed cost of $500,000 per year and is expected to increase sales revenue by $900,000 per year. a. Calculate the break-even point (in units) for the new project. b. Analyze the impact of the new project on the overall break-even point and profitability of Company PQR