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