Find companys overall break-even point in total sales dollar

Reference no: EM131157571

Cost and Decision-Making Analysis

Cheryl Montoya picked up the phone and called her boss, Wes Chan, Vice President of Marketing at Piedmont Fasteners Corporation.

Cheryl: "Wes, I'm not sure how to go about answering the questions that came up at the meeting with the President yesterday."

Wes: "What's the problem?".

Cheryl: "The president wanted to know the break-even point for each of the company's products, but I am having trouble figuring them out."
Wes: "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 at its manufacturing facility in North Carolina. Data concerning these products appear below:

	Velcro	Metal	Nylon
Normal annual sales volume	100,000 units	200,000 units	400,000 units
Unit selling price	$1.65	$1.50	$0.85
Variable cost per unit	$1.25	$0.70	$0.25

All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptably large numbers of customers.

The company has a very effective lean production system, so there is no beginning or ending work in process or finished-goods inventories.
Using the module readings, the Argosy University online library resources, and the Internet, research break-even point and costing systems.

Analyze the case based on your research and what you have learned so far in the course.

Respond to the following:

• Calculate the company's overall break-even point in total sales dollars. Explain your methodology (approximately 2 pages).

• Of the total fixed costs of $400,000: $20,000 could be avoided if the Velcro product were dropped, $80,000 if the Metal product were dropped, and $60,000 if the Nylon product were dropped. The remaining fixed costs of $240,000 consist of common fixed costs such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely (approximately 2 pages):

o Calculate the break-even point in units for each product. Explain your methodology.

o Determine the overall profit of the company if the company sells exactly the break-even quantity of each product. Present your results.

• Evaluate costing systems for this company. Explain if this company should be using a job-order or process-costing system to accumulate costs (1 page).

Be sure to include your calculations in Microsoft Excel format.

Write a 5-6-page report in Word format. Apply APA standards to citation of sources.

Reference no: EM131157571

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