In: Accounting
You are the new cost accountant for ABX Corporation. After
careful review of the company’s operations you have been tasked to
determine the company’s break-even point, the numbers sold to meet
the company’s target profit and contribution income statement for
both outcomes. Management has also asked that you provide the pros
and cons for variable, traditional and activity-based costing
method. After providing the pros and cons of each method recommend
one method for the company’s use and support your discussion.
Company’s Data: ABX Corporation sold 450,000 units at $75/unit.
Fixed cost are $5,300,000 per year. Variable costs are $45 per
unit. ABX Corporation desires a target profit of $6,500,000 per
year.