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Assignment 2: Required Assignment 1?Cost and Decision-Making Analysis




Question;Assignment 2: Required Assignment 1?Cost and Decision-Making AnalysisCheryl Montoya picked up the phone and called her boss, Wes Chan, Vice President of Marketing at Piedmont Fasteners Corporation.Cheryl: ?Wes, I'm not sure how to go about answering the questions that came up at the meeting with the President yesterday.?Wes: ?What's the problem??.Cheryl: ?The president wanted to know the break-even point for each of the company's products, but I am having trouble figuring them out.?Wes: ?I'm sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.?Piedmont Fasteners Corporation makes three different clothing fasteners at its manufacturing facility in North Carolina. Data concerning these products appear below:Velcro Metal NylonNormal annual sales volume 100,000 units 200,000 units 400,000 unitsUnit selling price $1.65 $1.50 $0.85Variable cost per unit $1.25 $0.70 $0.25Total fixed expenses are $400,000 per year.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.Respond to the following:(a) 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):(b) Calculate the break-even point in units for each product. Explain your methodology.(c) Determine the overall profit of the company if the company sells exactly the break-even quantity of each product. Present your results.(d) 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).


Paper#42028 | Written in 18-Jul-2015

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