Problem: Howard Beal co. manufactures molds for casting aluminum alloy test samples. Fixed costs amount to $20,000 per year. Variable costs for each unit manufactured are $16. Sales price per unit is $28.
1) What is the contribution margin of the product?
2) Calculate the break-even point in unit sales and dollars.
3) What is the operating profit (loss) if the company manufactures and sells:
(i) 1,500 units per year?
(ii) 3,000 units per year?
4) Plot a break-even chart using the foregoing figures.