Part B GH Artist Supply, Inc. is a new company that specializes in panels and...
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Accounting
Part B
GH Artist Supply, Inc. is a new company that specializes in panels and frames for artists.
In a new product line, GH managers plan to create new, eco-friendly panels in three sizes: large, medium, and small.
The current budget plan for the first year of operations provides the following information:
Small
Medium
Large
# of units
200
110
80
Selling price per unit
$20
$45
$90
Variable cost per unit
$14
$18
$31
Fixed costs
$5,000
$2,800
$2,200
Required
Two managers within GH are arguing about the best way to calculate the break-even point in this multi-product scenario. Each has their own method they would like to use.
Compute the break-even point using the two common methods used for multi-product scenarios.
For each method, describe the assumption that is unique to that method.
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