Chambers Company has just gathered estimates forconducting a breakeven analysis for a new product.Variable costs are $7 a unit. The additional plant willcost $48,000. The new product will be charged $18,000a year for its share of general overhead. Advertisingexpenditures will be $80,000, and $55,000 will be spenton distribution. If the product sells for $12, what is thebreakeven point in units? What is the breakeven pointin dollar sales volume?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 7EA: Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per...
Question

Chambers Company has just gathered estimates for
conducting a breakeven analysis for a new product.
Variable costs are $7 a unit. The additional plant will
cost $48,000. The new product will be charged $18,000
a year for its share of general overhead. Advertising
expenditures will be $80,000, and $55,000 will be spent
on distribution. If the product sells for $12, what is the
breakeven point in units? What is the breakeven point
in dollar sales volume?

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