1. For your first assignment, management has provided the following revenue and cost information:

	High-End Set		Economical Set
Sales price	$3,500	per unit	$1,000	per unit
Labor	$875	per unit	$250	per unit
Materials	$1400	per unit	$300	per unit
Direct fixed costs	$25,000	per month	$16,500	per month
Allocated fixed costs	$85,000	per month	$85,000	per month

They want a better understanding of their business to make budgeting and sales goals decisions and have asked you to determine their:

1. Contribution Margins for each product line
2. Break-even quantities for each product line
3. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)
4. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price)

They expect the product lines to fully absorb the costs allocated to them. They have also asked that you show each step in your calculations so that they can understand your analysis. (Note: you will be graded on your intermediary values.)

Once you have determined these amounts, they have asked that you:

• present the information
• describe how you performed your calculations
• and explain what the results mean