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Piedmont Fasteners Corporation makes three different clothing fasteners In Its manufacturing facility In North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Nylon 410,400 Velcro Metal Annual sales volume 102,600 205, 200 Unit selling price 1.65 $ 1.25 S 1.58 $ 0.70 $ 0.80 $ e.85 Variable expense per unit Contribution margin per unit 8.25 e.48 $ 0.60 Total fixed expenses are $410,400 per perlod. Of the total fixed expenses, $20,000 could be avoided If the Velcro product is dropped, S80,000 If the Metal product is dropped, and $60.000 If the Nylon product is dropped. The remaining fixed expenses of $250,400 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by golng out of business entirely. The company's managers would like to compute the break-even polnt in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point unit sales: Method #t. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method #2 Only Include each product's traceable fixed costs In the numerator of each break-even calculation. Required: 1. Using data from the most recent period, prepare a contribution format segmented income statement. 2 What Is the company's over-all break-even polnt in dollar sales? 3a. Calculate the break-even polnt in unit sales for each product using method 1. 3b. If the company sells exactly the break-even quantity of each product, what will be the overall profit for the company using method 1?

Piedmont Fasteners Corporation makes three different clothing fasteners In Its manufacturing facility In North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Nylon 410,400 Velcro Metal Annual sales volume 102,600 205, 200 Unit selling price 1.65 $ 1.25 S 1.58 $ 0.70 $ 0.80 $ e.85 Variable expense per unit Contribution margin per unit 8.25 e.48 $ 0.60 Total fixed expenses are $410,400 per perlod. Of the total fixed expenses, $20,000 could be avoided If the Velcro product is dropped, S80,000 If the Metal product is dropped, and $60.000 If the Nylon product is dropped. The remaining fixed expenses of $250,400 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by golng out of business entirely. The company's managers would like to compute the break-even polnt in dollar sales for the company as a whole, and the break-even point in unit sales for each product. They are considering two methods for computing each product's break-even point unit sales: Method #t. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method #2 Only Include each product's traceable fixed costs In the numerator of each break-even calculation. Required: 1. Using data from the most recent period, prepare a contribution format segmented income statement. 2 What Is the company's over-all break-even polnt in dollar sales? 3a. Calculate the break-even polnt in unit sales for each product using method 1. 3b. If the company sells exactly the break-even quantity of each product, what will be the overall profit for the company using method 1?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter14: Quality And Environmental Cost Management
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Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Velcro Metal Nylon 410,400 Annual sales volume 102, 600 1.65 $ 205, 200 Unit selling price Variable expense per unit Contribution margin per unit 1.58 $ e.85 1.25 $ 8.40 $ 8.70 0.25 8.80 $ 0.60 Total fixed expenses are $410,400 per perlod. Of the total fixed expenses, $20,000 could be avoided If the Velcro product is dropped, S80,000 If the Metal product is dropped, and $60,000 if the Nylon product Is dropped. The remaining fixed expenses of $250,400 consist of common fixed expenses such as administrative salarles and rent on the factory bullding that could be avoided only by golng out of business entirely. The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even polnt in unit sales for each product. They are considering two methods for computing each product's break-even point unit sales: Method #t. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method #2 Only Include each product's traceable fixed costs In the numerator of each break-even calculation. Required: 1. Using data from the most recent perlod, prepare a contribution format segmented income statement. 2 What is the company's over-all break-even polnt in dollar sales? 3a. Calculate the break-even polnt in unit sales for each product using method 1. 3b. If the company sells exactly the break-even quantity of each product, what wll be the overall profit for the company using method 1? 4a. Calculate the break-even polnt in unit sales for each product using method 2. 4b. If the company sells exactly the break-even quantity of each product, what wll be the overall profit for the company using method 2? 5. Which method should the company use to calculate each product's break-even polnt in unit sales? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3a and 3b Req 4a and 4b Req 5 Using data from the most recent period, prepare a contribution format segmented income statement. Piedmont Fasteners Corporation Contribution Format Income Statement Velcro Metal Nylon Total
Transcribed Image Text:Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable number of customers. Data from the most recent period concerning these products appear below: Velcro Metal Nylon 410,400 Annual sales volume 102, 600 1.65 $ 205, 200 Unit selling price Variable expense per unit Contribution margin per unit 1.58 $ e.85 1.25 $ 8.40 $ 8.70 0.25 8.80 $ 0.60 Total fixed expenses are $410,400 per perlod. Of the total fixed expenses, $20,000 could be avoided If the Velcro product is dropped, S80,000 If the Metal product is dropped, and $60,000 if the Nylon product Is dropped. The remaining fixed expenses of $250,400 consist of common fixed expenses such as administrative salarles and rent on the factory bullding that could be avoided only by golng out of business entirely. The company's managers would like to compute the break-even point in dollar sales for the company as a whole, and the break-even polnt in unit sales for each product. They are considering two methods for computing each product's break-even point unit sales: Method #t. Include each product's traceable fixed costs and an allocated share of the common fixed costs in the numerator of each break-even calculation. The common fixed costs would be allocated to the three products using sales dollars as the allocation base. Method #2 Only Include each product's traceable fixed costs In the numerator of each break-even calculation. Required: 1. Using data from the most recent perlod, prepare a contribution format segmented income statement. 2 What is the company's over-all break-even polnt in dollar sales? 3a. Calculate the break-even polnt in unit sales for each product using method 1. 3b. If the company sells exactly the break-even quantity of each product, what wll be the overall profit for the company using method 1? 4a. Calculate the break-even polnt in unit sales for each product using method 2. 4b. If the company sells exactly the break-even quantity of each product, what wll be the overall profit for the company using method 2? 5. Which method should the company use to calculate each product's break-even polnt in unit sales? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3a and 3b Req 4a and 4b Req 5 Using data from the most recent period, prepare a contribution format segmented income statement. Piedmont Fasteners Corporation Contribution Format Income Statement Velcro Metal Nylon Total
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