Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: "Wes, I'm not sure how to go about answering the questions that came up at the meeting with the president yesterday." "What's the problem?" "The president wanted to know the break-even point for each of the company's products, but I am having trouble figuring them out." "I'm sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00." Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below: Velcro Metal Nylon Annual sales volume Unit selling price Variable expense per unit 105,000 196, 000 293,000 $ 1.60 $ 0.80 $ 1.60 $ 1.00 $ 1.40 $ 1.00 Total fixed expenses are $268,000 per year. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable numbers of customers. The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished goods inventories. Required: 1. What is the company's overall break-even point in dollar sales? 2. Of the total fixed expenses of $268,000, $16,980 could be avoided if the Velcro product is dropped, $132,800 if the Metal product is dropped, and $78,800 if the Nylon product is dropped. The remaining fixed expenses of $39,420 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. a. What is the break-even point in unit sales for each product? b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Complete this question by entering your answers in the tabs below.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 64C: Consider the following conversation between Leonard Bryner, president and manager of a firm engaged...

See similar textbooks

Related questions

Question

100%

CS_1_PIR_second

Required 1: What is the company’s overall break-even point in dollar sales? (Round CM ratio to 4 decimal places and final answer to the nearest thousand dollars.)

Break-even point in dollar sales

Required 2A: Of the total fixed expenses of $268,000, $16,980 could be avoided if the Velcro product is dropped, $132,800 if the Metal product is dropped, and $78,800 if the Nylon product is dropped. The remaining fixed expenses of $39,420 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. What is the break-even point in unit sales for each product? (Do not round intermediate calculations.)

	Velcro	Metal	Nylon
Break-even point in unit sales

Required 2B: Of the total fixed expenses of $268,000, $16,980 could be avoided if the Velcro product is dropped, $132,800 if the Metal product is dropped, and $78,800 if the Nylon product is dropped. The remaining fixed expenses of $39,420 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. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company?

Net operating incomeselected answer incorrect

Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners
Corporation: "Wes, I'm not sure how to go about answering the questions that came up at the meeting with the president yesterday."
"What's the problem?"
"The president wanted to know the break-even point for each of the company's products, but I am having trouble figuring them out."
"I'm sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the
follow-up meeting at 9:00."
Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data
concerning these products appear below:
Velcro
Metal
Nylon
Annual sales volume
Unit selling price
Variable expense per unit
105,000 196, 000 293,000
$ 1.60
$ 0.80
$ 1.60
$ 1.00
$ 1.40
$ 1.00
Total fixed expenses are $268,000 per year.
All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable
numbers of customers.
The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished
goods inventories.
Required:
1. What is the company's overall break-even point in dollar sales?
2. Of the total fixed expenses of $268,000, $16,980 could be avoided if the Velcro product is dropped, $132,800 if the Metal product
is dropped, and $78,800 if the Nylon product is dropped. The remaining fixed expenses of $39,420 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.
a. What is the break-even point in unit sales for each product?
b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company?
Complete this question by entering your answers in the tabs below.

Expert Solution

Step 1

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.