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 the contribution income statement for both outcomes. Management has also asked that you provide the pros and cons for variable, traditional, and activity-based costing methods. After providing each method’s pros and cons, 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 costs are $5,300,000 per year. Variable costs are $45 per unit. ABX Corporation desires a target profit of $6,500,000 per year.
