Of the total fixed expenses of $400,000, $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. What is the break-even point in unit sales for each product? If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Explain this result.
Of the total fixed expenses of $400,000, $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. What is the break-even point in unit sales for each product? If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Explain this result.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5-32 #2 Of the total fixed expenses of $400,000, $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.
- What is the break-even point in unit sales for each product?
- If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company? Explain this result.
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