Question

Executive officers of Piedmont Company are assessing the profitability of a potential new product. They expect that the variable cost of making the product will be $60 per unit and fixed manufacturing cost will be $720,000. The executive officers plan to sell the product for $80 per unit.

Required
Determine the break-even point in units and dollars using each of the following approaches:
a. Contribution margin per unit.
b. Equation method.
c. Contribution margin ratio.
d. Prepare a break-even graph to illustrate the cost-volume-profit relationships.



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  • CreatedFebruary 07, 2014
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