Extreme Equipment Co. manufactures and markets a number of rope products. Management is considering the future of Product HG, a special rope for hang gliding, that has not been as profitable as planned. Since Product HG is manufactured and marketed independently of the other products, its total costs can be precisely measured. Next year’s plans call for a $200 selling price per 100 yards of HG rope. Its fixed costs for the year are expected to be $330,000, up to a maximum capacity of 20,000,000 yards of rope. Forecasted variable costs are $170 per 100 yards of HG rope.

Required
1. Estimate Product HG’s break-even point in terms of
(a) Sales units and
(b) Sales dollars.
2. Prepare a CVP chart for Product HG like that in Exhibit 5.14. Use 20,000,000 yards as the maximum number of sales units on the horizontal axis of the graph, and $4,000,000 as the maximum dollar amount on the vertical axis.
3. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for Product HG at the break-even point.