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Question - Xavier's Yellow Zippers Corporation (XYZ Corp) sold 2,200 zippers in 2020 for $6 apiece. Xavier buys the zippers for $2 each and it costs $1 to paint each zipper yellow and add a snazzy logo. Xavier paid $200 a month to rent a sales booth at his local outdoor market, along with a sales commission of $1 per zipper sold (his sister made all the sales on commission). Complete XYZ Corp's contribution income statement.
Required -
a) Xavier is wondering what his break-even point is. Calculate both the break-even revenue and sales volume.
b) Next year, Xavier is planning to sell 3,000 zippers. What will be his margin of safety?
c) Prepare a Cost-Volume-Profit graph for XYZ Corp. Label the axes, lines, loss and profit areas, and break-even point clearly on your graph.
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