Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners
Corporation: "Wes, I'm 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 company's products, but I am having trouble figuring them out."
"I'm 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."
Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data
concerning these products appear below:
Annual sales volume
Unit selling price
Variable expense per unit
Velcro
102,000
$1.70
$0.90
Metal
216,000
$1.70
$1.20
Nylon
312,000
$1.30
$1.10
es
Total fixed expenses are $257,000 per year.
All three products are sold in highly competitive markets, so the company is unable to raise prices without losing an unacceptable
numbers of customers.
The company has an extremely effective lean production system, so there are no beginning or ending work in process or finished
goods inventories.
Required:
1. What is the company's over-all break-even point in dollar sales?