**Piedmont Fasteners Corporation**Piedmont Fasteners Corporation manufactures three different clothing fasteners at its North Carolina facility. These products are sold in competitive markets, preventing price increases without losing customers. Recent data on these products is shown below:| | Velcro | Metal | Nylon ||------------------|--------|-------|-------|| Annual sales volume | 101,800 | 203,600 | 407,200 || Unit selling price | $1.65 | $1.50 | $0.85 || Variable expense per unit | $1.25 | $0.70 | $0.25 || Contribution margin per unit | $0.40 | $0.80 | $0.60 |Total fixed expenses: $407,200 per period. Avoidable fixed expenses if dropped: Velcro $20,000, Metal $80,000, Nylon $60,000. The remaining fixed expenses of $247,200 are common, related to administrative salaries, and factory rent, avoidable only by business closure.**Management's Objective**Managers aim to compute:- The break-even point in dollar sales for the company overall.- The break-even point in unit sales for each product.**Methods for Break-even Analysis**- **Method #1**: Include each product's traceable fixed costs plus a share of common fixed costs, allocated based on sales dollars.- **Method #2**: Include only each product’s traceable fixed costs.**Tasks Required**1. Prepare a contribution format segmented income statement using recent data.2. Determine the overall break-even point in dollar sales.3. Calculate the break-even point in unit sales for each product using Method #1. 3a. Determine profit if the exact break-even quantity sells by product. 4. Calculate the break-even point in unit sales for each product using Method #2. 4b. Determine profit if the exact break-even quantity sells by product. 5. Recommend which method should be used for calculating each product's break-even point in unit sales.

In the question, there are multi-subparts and our guideline is to solve first three only.A…

1. Using data from the most recent period, prepare a contribution format segmented income statement. 2. What is the company's overall break-even point in dollar sales? 3a. Calculate the break-even point in unit sales for each product using method 1. 3b. What will be the company's overall profit if it sells exactly the break-even quantity of each product?

1. Using data from the most recent period, prepare a contribution format segmented income statement. 2. What is the company's overall break-even point in dollar sales? 3a. Calculate the break-even point in unit sales for each product using method 1. 3b. What will be the company's overall profit if it sells exactly the break-even quantity of each product?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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