# wk3 michael smith

Cheryl 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. Analyze the case based on your research and what you have  learned so far in the course.
Respond to the following:

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):

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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 5–6-page report in Word format. Apply APA standards to  citation of sources. Use the following file naming convention:  LastnameFirstInitial_M3_A2.doc.

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