Diamond Jim’s makes and sells class rings for local schools. Operating information is as follows:
Selling price per ring ........... $600
Variable cost per ring
Rings and stones ........... $220
Sales commissions ............ 48
Overhead .............. 32
Annual fixed cost
Selling expenses ........... $180,000
Administrative expenses ........ 105,000
Manufacturing ............. 60,000
a. What is Diamond Jim’s break-even point in rings?
b. What is Diamond Jim’s break-even point in sales dollars?
c. What would Diamond Jim’s break-even point be if sales commissions increased to $54?
d. What would Diamond Jim’s break-even point be if selling expenses decreased by $6,000?