Cost.Volume.Profit Relationships 199
Required!. L Compute the monthly break-even point for [he new toy in units and in total safes dol]ars_ Show all computations_ How many units must he sold each month to make a monthly profit of $12,000? 3. If the sal as manager receives a bonus of 10 cents for each unit. sold in excess of the break-even point, how MELfly trIli[S must be sold each month to earn a net 1.1 rn.of 25% on the monthly in.,..e.„;L_ mcnt in fixed costs?
0.,45E 4-32 Breakevens for Individual Products in a Multiproduct Company [106 L09] Cheryl Montoya picked up the phone and called her boss, We Chan, the vice president or market-ing at Piedmont Fasteners Corporation! “Wes, Fin ftOL sure. how to go about answering the (plias-lions that came up at the meeting with the president yesterday.,” “What’s the problem:J.1i ‘The president wanted to know the break-even point for each of the company’s product [s, but I an) having [rouble b.g tiring then) out.” “rrn sure you can handle it, Cheryl,. And, by the way. need your analysis on my desk tomor-row morning at 8:00 sharp in time for the follow-up meeting at 9;00.” Piedmont Fastedm Corporation nink.es three different clothing fasteners in its manufacturing facility in North Carolina., Data concc rniJI$ these products appear below:
Velcro Metal Nylon Normal annual sales volume ……… 100,1Mo 200,000 400,000 Unit selling price ……………… $1.55 31.50 $0,85 Variable cost per unit . $125 $0.70 $13,25
Total fixed. expenses arc $400,000 per year. All three products are sold it) highly competitive markets. so the company is 10 ?abk to raise its prices without losing unacceptable numbers of customers_ The company has an extremely effective teen produe[ion system, so there are a° beginning Or ending work in process or finished goods 171vultodes, Reoired: 1. What is the company’s overall break-even point in [otal sales dollars.? 2, Of the total fixed costs of $400,000, S20,.000 could he avoided if the Velem product were dropped, sso,oat) if the Metal product were dropped, and 560,000 i1 the Nylon product were dropped. The remaining fixed costs. of $240,000 consist of com mon fixed costs ;.3ucli as admin-istrative 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 units for each product? b. if the company sells exactly We break-even quantity of each product, what be the
over.all profit of the compaily? Explain this result.
CASE 4-33 Cast Structure; Target Profit and Break. Even Analysis [L04! 105, LOG] Pi [[Irian Company is a small bin growing manefacturcr of telecommunications equipment, The coin-paay has 1)0 sales force of its own; rather, it relies comple[ely on independent sales agents, to market its Products. These agents arc paid a commission of 1151X. of selling price for all items sold. Barbara Cheney, P’illtman”s controller, has just prepared the company’s budgeted iireorne state-filen t for next year. The statement follows: