Assignment 2: Required Assignment 1Cost 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 Nylon
Normal annual sales volume 100,000 units 200,000 units 400,000 units
Unit selling price $1.65 $1.50 $0.85
Variable cost per unit $1.25 $0.70 $0.25
Total 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.Using the module readings, the Argosy University online library resources, and the Internet, research break-even point and costing systems.
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.
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).
Be sure to include your calculations in Microsoft Excel format.Write a 56-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M3_A2.doc.By the due date assigned, deliver your assignment to the Submissions Area
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