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Problem 3-20A (Algo) Determining the break-even point and preparing a break-even graph LO 3-1, 3-3 Reid Company is considering the production of a new product.
Problem 3-20A (Algo) Determining the break-even point and preparing a break-even graph LO 3-1, 3-3 Reid Company is considering the production of a new product. The expected variable cost is $24 per unit. Annual fixed costs are expected to be $892,500. The anticipated sales price is $75 each. Required Determine the break-even point in units and dollars using each of the following: a. Use the equation method. b. Use the contribution margin per unit approach. c. Use the contribution margin ratio approach. (Do not round intermediate calculations. Round "Contribution margin ratio" to 1 decimal place. (i.e., 0.234 should be entered as 23.4)) a. Break-even point in units Break-even point in dollars b. Contribution margin per unit Break-even point in units Break-even point in dollars Contribution margin ratio Break even point in units Break even point in dollars Thornton Company is considering adding a new product. The cost accountant has provided the following data: Expected variable cost of manufacturing Expected annual fixed manufacturing costs 48 per unit $ 65,000 The administrative vice president has provided the following estimates: Expected sales comission Expected annual fixed administrative costs $ 6 per unit $ 55, eee The manager has decided that any new product must at least break even in the first year. Required Use the equation method and consider each requirement separately. a. If the sales price is set at $74, how many units must Thornton sell to break even? b. Thornton estimates that sales will probably be 12.000 units. What sales price per unit will allow the company to break even? c. Thornton has decided to advertise the product heavily and has set the sales price at $79. If sales are 9,000 units, how much can the company spend on advertising and still break even? a Number of units b Sales price c Advertising cost per unit
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