1. Owen Conner works part-time packaging software for a local distribution company in Indiana. The annual fixed cost is $10,000 for this process, direct labor is $3.50 per package, and material is $4.50 per package. The selling price will be $12.50 per package. How much revenue do we need to take in before breaking even? What is the break-even point in units?

2. AudioCables, Inc. is currently manufacturing an adapter that has a variable cost of $.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $.60, but sales volume should jump to 50,000 units due to a higher-quality product. Should AudioCables buy the new equipment?

3. Consider the construction of a simple 8" x 10 wood picture frame. The picture frame consists of four wood pieces that are cut from the wood molding, four staples to hold the frame together, a piece of glass, a backing board made of cardboard, six points to hold the glass and backing board to the frame, and a clip for hanging the picture frame from the wall.

a. Construct an assembly chart for the picture frame.

b. Construct a flowchart for the entire process from receiving materials to final inspection.