Assignment:
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:
1. Calculate the company's overall break-even point in total sales dollars. Explain your methodology (approximately 2 pages).
2. 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.
3. 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).
Write a 2 pages report in Word format. Apply APA standards to citation of sources.