3a. Calculate the break-even point in unit sales for each product using method 1. 3b. If the company sells exactly the break-even quantity of each product, what will be the overall profit for the company using method 1? 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?
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- 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 101,800 $ 1.65 $ 1.25 $ 0.40 Metal 203,600 $ 1.50 $ 0.70 $ 0.80 Nylon 407, 200 $ 0.85 $ 0.25 $ 0.60 Total fixed expenses are $407,200 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 $247,200 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. The company's managers would like to…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 Velcro 101,800 Metal 203,600 Nylon 407,200 Unit selling price $ 1.65 $ 1.50 $ 0.85 Variable expense per unit $ 1.25 $ 0.70 Contribution margin per unit $ 0.40 $ 0.80 $ 0.25 $ 0.60 Total fixed expenses are $407,200 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 $247,200 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…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: Velcro Metal Nylon 410,400 Annual sales volume 102, 600 1.65 $ 205, 200 Unit selling price Variable expense per unit Contribution margin per unit 1.58 $ e.85 1.25 $ 8.40 $ 8.70 0.25 8.80 $ 0.60 Total fixed expenses are $410,400 per perlod. Of the total fixed expenses, $20,000 could be avoided If the Velcro product is dropped, S80,000 If the Metal product is dropped, and $60,000 if the Nylon product Is dropped. The remaining fixed expenses of $250,400 consist of common fixed expenses such as administrative salarles and rent on the factory bullding that could be avoided only by golng out of business entirely. The company's managers would like to…
- 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 Metal 200,000 Nylon 400,000 $ 1.65 $ 1.50 $ 1.25 $ 0.70 $ 0.40 $ 0.80 $ 0.85 $ 0.25 $ 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. The company's managers would like to…Dikit Corporation makes three different clothing fasteners. Data concerning the three products are as follows: VELCRO METAL NYLON 400,000 Normal monthly sales 100,000 200,000 volume P1.65 P1.50 PO.85 unit 1.25 0.70 0.25 Unit selling price Variable cost per Total fixed expenses are P400,000 per month. All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable number of customers. The company has an extremely lean production system, so there is no beginning or ending work in process or finished goods inventories. What is the company's over-all break-even point in pesos?Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 28,700 additional Sun Sound and 31,600 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sun SoundHeadphones Ear BlingHeadphones Sales price $37.50 $58.50 Variable cost of goods sold (21.00) (32.80) Manufacturing margin $16.50 $25.70 Variable selling and administrative expenses (7.50) (11.70) Contribution margin $9.00 $14.00 Fixed manufacturing costs (3.40) (5.30) Operating income $5.60 $8.70 Prepare an analysis indicating the increase or decrease in total profitability if 28,700 additional Sun Sound and 31,600 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two…
- Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 26,800 additional Sun Sound and 29,700 additional Ear Bling headphones could be sold. The operating income by unit of product is as follows: Sun SoundHeadphones Ear BlingHeadphones Sales price $35.60 $55.50 Variable cost of goods sold (19.90) (31.10) Manufacturing margin $15.70 $24.40 Variable selling and administrative expenses (7.10) (11.10) Contribution margin $8.60 $13.30 Fixed manufacturing costs (3.20) (5.00) Operating income $5.40 $8.30 Prepare an analysis indicating the increase or decrease in total profitability if 26,800 additional Sun Sound and 29,700 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal place.…When prices are falling (deflation), which costing method would produce the highest gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or weighted average, assuming that B62 Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming B62 sold just one unit of these goods for $400. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)Kimball Company has developed the following cost formulas: Materialusage:Ym=80X;r=0.95Laborusage(direct):Yl=20X;r=0.96Overheadactivity:Yo=350,000+100X;r=0.75Sellingactivity:Ys=50,000+10X;r=0.93 where X=Directlaborhours The company has a policy of producing on demand and keeps very little, if any, finished goods inventory (thus, units produced equals units sold). Each unit uses one direct labor hour for production. The president of Kimball Company has recently implemented a policy that any special orders will be accepted if they cover the costs that the orders cause. This policy was implemented because Kimballs industry is in a recession and the company is producing well below capacity (and expects to continue doing so for the coming year). The president is willing to accept orders that minimally cover their variable costs so that the company can keep its employees and avoid layoffs. Also, any orders above variable costs will increase overall profitability of the company. Required: 1. Compute the total unit variable cost. Suppose that Kimball has an opportunity to accept an order for 20,000 units at 220 per unit. Should Kimball accept the order? (The order would not displace any of Kimballs regular orders.) 2. Explain the significance of the coefficient of correlation measures for the cost formulas. Did these measures have a bearing on your answer in Requirement 1? Should they have a bearing? Why or why not? 3. Suppose that a multiple regression equation is developed for overhead costs: Y = 100,000 + 100X1 + 5,000X2 + 300X3, where X1 = direct labor hours, X2 = number of setups, and X3 = engineering hours. The coefficient of determination for the equation is 0.94. Assume that the order of 20,000 units requires 12 setups and 600 engineering hours. Given this new information, should the company accept the special order referred to in Requirement 1? Is there any other information about cost behavior that you would like to have? Explain.
- Valmont Company developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $9,300. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP-200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 18,000 hours before replacement. It only requires $1,900 of preventive maintenance during its useful life and it consumes $165 of electricity per 900 hours used. These figures compare favorably to the competing piece of equipment that sells for $18,000, needs to be replaced after 9,000 hours of use, requires $3,800 of…What is the firm’s margin of safety?Valmont Company developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $8,800. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP-200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 13,000 hours before replacement. It only requires $1,400 of preventive maintenance during its useful life and it consumes $140 of electricity per 650 hours used. These figures compare favorably to the competing piece of equipment that sells for $13,000, needs to be replaced after 6,500 hours of use, requires $2,800 of…