Problem 21-3B Hip-Hop Co. manufactures and markets several products. Management is considering the future of...
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Accounting
Problem 21-3B Hip-Hop Co. manufactures and markets several products. Management is considering the future of one product, electronic keyboards, that has not been as profitable as planned. Since this product is manufac- tured and marketed independently of the other products, its total costs can be precisely measured. Next year's plans call for a $350 selling price per unit. The fixed costs for the year are expected to be $42,000, up to a maximum capacity of 700 units. Forecasted variable costs are $210 per unit. Break-even analysis P2 P3 Required sales, 1. Estimate the keyboards' break-even point in terms of (a) sales units and (b) sales dollars. 2. Prepare a contribution margin income statement showing sales, variable costs, and fixed costs for keyboards at the break-even point. 3. Prepare a CVP chart for keyboards like that in Exhibit 21.14. Use 700 keyboards as the maximum number of sales units on the horizontal axis of the graph and $250,000 as the maximum dollar amount on the vertical axis
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