For your first assignment, management has provided the following revenue and cost information: High-End Set Economic Set Sales Price $3,500 per unit $1,000 per unit Labor $875 per unit $250 per unit Material $1,400 per unit $300 per unit Direct Fixed Cost $25,000 per month $16,500 per month Allocated Fixed Cost $85,000 per month $85,000 per month   1

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

High-End Set Economic Set

Sales Price $3,500 per unit $1,000 per unit

Labor $875 per unit $250 per unit

Material $1,400 per unit $300 per unit

Direct Fixed Cost $25,000 per month $16,500 per month

Allocated Fixed Cost $85,000 per month $85,000 per month

 

1.   Break-even quantities for each product line

2.   Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)

3.   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. 

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