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1. What are the assumptions implicit in Bill French's determination of his company's break-even point? Assumptions
Sales volume will be maintained.
No planned changes in volume next year
Only one, aggregate break-even point is utilized in the analysis.
Sales mix will remain constant.
Linearity will be exhibited by both total revenues and expenses over the relevant range.
No capital investments that will increase fixed costs.
Constant dividends are paid out to the company's …show more content…

What level of operations must be achieved to pay the extra dividend, ignoring union demands?
Breakeven Point (Reallocated Sales) Aggregate A B C
Sales at Full Capacity (units)
2,000,000.000
Sales Mix 0.229 0.229 0.543
Actual Sales Volume
1,750,000.000 400,000.000 400,000.000 950,000.000 Unit Sales Price 7.200 10.000 9.000 4.800
Total Sales Revenue
12,600,000.000
4,000,000.000
3,600,000.000
4,560,000.000 Variable Cost per Unit 4.500 7.500 3.750 1.500
Fixed Costs (Total)
3,690,000.000
640,000.00
1,560,000.00
1,490,000.00 Contribution Margin per Unit 2.700 2.500 5.250 3.300
Weighted Contribution Margin
3.60
0.550
1.260
1.790 Breakeven Point 1,035,685.646 236,728.148 236,728.148 562,229.350
Net Income 600,000
Taxes
600,000
EBIT
1,200,000
Fixed Costs
3,690,000.00
Weighted Contribution Margin
3.60 Level of Operations w/dividends only 1,358,333.333
c. What level of operations must be achieved to meet the union demands, ignoring bonus dividends?
Level of Operations w/union demands only (Variable Costs + 10%) Aggregate A B C
Sales at Full

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