Peidmont Fasteners Company makes three different clothing fasteners in its manufacturing facility: Data concerning these projects are as follows:
Normal annual sales volume: (velcro 100,000) (Metal 200,000) (nylon 400,000)
Unit Selling price: (Velcro $1.65) (Metal $1.50) (nylon $.85)
Variable cost per unit (Velcro $1.25) (Metal $.70) (nylon$.25)
Total fixed expenses are $400,000 per year. There are no beginning or ending work in process or finished goods inventories.
1. What is the company's overall break-even point in total sales dollars?
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 products were dropped, and 60,000 if nylon were dropped. The remaining $240,000 consists of common fixed costs, such as, admin. Salaries and rent that could be avoided by going out of business.
A. What is the break-even point in units for each product?
B. If the company sell exactly the break-even quantity of each product, what will be the overall profit of the company? Explain