Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $540 each.

Costs

1. Plastic for casing$15,000

Wages of assembly workers$90,000

Property taxes on factory$8,000

Accounting staff salaries$42,000

Drum stands (1,000 stands purchased)$38,000

Rent cost of equipment for sales staff$36,000

Upper management salaries$205,000

Annual flat fee for factory maintenance service$20,000

Sales commissions$25 per unit 1

Machinery depreciation, straight-line$35,000

1. TrueBeat expects production and sales levels to remain constant from year 4 onward at 6,000 drum sets. Write a Profit Formula for TrueBeats operations using variable costing. NOI = Q x CM unit FC, where Q represents the number of units produced and sold, CM unit is the contribution margin per unit and FC is the total fixed expenses.

1. Profit formula ____________________
2. Complete chart assuming the same number of units will be produced and sold.

Units produced/sold	Sales Revenue	Variable Expenses	Fixed Expenses	Profit/NOI
4,000
5,000
6,000
7,000

3. Prepare a Cost-Volume-Profit graph for TrueBeat Company (you can use the graph at the end of the assignment or create your own)
   1. Label both the x and y axis using appropriate increments. Dollar values should be used for the y axis and number of units for the x axis.
   2. Plot the Fixed Expense line. Label it.
   3. Plot the Sales Revenue line and label it.
   4. Plot the Total Expense line and label it.
   5. Indicate the Break-even Point on the graph and label it.
   6. Shade and label the portion of the graph that indicates the companys positive profit.