Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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: Annual sales volume Unit selling price Variable expense per unit Contribution margin per unit Velcro 100,000 S 1.65 $ 1.25 $ 0.00 200,000 $ 1.50 $ 0,70 3 0.80 Nylon 400,000 $ 0.85 S 0.25 8 0.60 Total fixed expenses are $400,000 per period 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 $240,000 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 unit sales: Method #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 #2.Only include each product's traceable fixed costs in the numerator of each break-even calculation Required: 1 Using data from the most recent period, prepare a contribution format segmented income statement 2. What is the company's over-all break-even point in dollar sales? 3a Calculate the break-even point in unit sales for each product using method 1 35. If the company sells exactly the break-even quantity of each product, what will be the overall profit for the company using method 12 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? 5. Which method should the company use to calculate each product's break even point in unit sales? Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req 3a and 3b Reg 4a and 4b Reg 5 Using data from the most recent period, prepare a contribution format segmented income statement. Piedmont Fasteners Corporation Contribution Format Income Statement Velcro Metal Nylon Total $ 0 0 Variable expenses Contribution margin 0 0 0 0 0 0 $ s 0 $ 0 0 Net operating income Reg 1 Req2 > Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3a and 3b Reg 4a and 4b Reg 5 What is the company's over-all break-even point in dollar sales? (Round your intermediate calculations to 4 decimal places and final answer to the nearest whole number.) Overall broak-even point Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3a and 3b Req 4a and 4b Reg 5 3a. Calculate the break-even point in unit sales for each product using method 1. (Do not round intermediate calculations and final answers to the nearest whole number.) 3b. If the company sells exactly the break-even quantity of each product what will be the overall profit for the company using method 12 Show less 3a Velcro's Break-even point in units Metal's Break-even point in units Nylon's Break-even point in units Overall profit (loss) 3b. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3a and 3b Req 4a and 4b Reg 5 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 22 4a Velcro's Break-even point in units Metal's Break-even point in nits Nylon's Break-even point in units Ab. Overall profit (loss) product's break-even point in unit sales? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3a and 3b Req 4a and 4b Reg 5 Which method should the company use to calculate each product's break-even point in unit sales? OMethod 1 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_2

Step: 3

blur-text-image_3

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

Modeling And Designing Accounting Systems Using Access To Build A Database

Authors: Laura R. Ingraham, C. Janie Chang

1st Edition

0471450871, 978-0471450870

More Books

Students explore these related Accounting questions