Case Study: Site Sources APA Format

Answer each question as if you were a consultant hired by the company and are presenting to the president. For each answer explain the terminology and concepts used. For example, in #1 rather than just give the breakeven for each scenario, explain the change in the volume of sales, explain the calculation - this is a professional report from a consultant to an executive committee.

Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation:

Wes, Im not sure how to go about answering the questions that came up at the meeting with the president yesterday.

"What's the problem?"

The president wanted to know the break-even point for each of the companys products, but I am having trouble figuring them out.

Im sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.

Below are the questions and correct answers for the professional report:

1. What is the companys overall break-even point in dollar sales?

2. Of the total fixed expenses of $273,000, $13,500 could be avoided if the Velcro product is dropped, $121,800 if the Metal product is dropped, and $92,500 if the Nylon product is dropped. The remaining fixed expenses of $45,200 consist of common fixed expenses such as administrative salaries and rent on the factory building that could be avoided only by going out of business entirely.

a. What is the break-even point in unit sales for each product?

b. If the company sells exactly the break-even quantity of each product, what will be the overall profit of the company?

Answers:

1. $738,836

2. Velcro- 22,500 Metal- 174,000 Nylon- 185,000

3. $45,200