Financial Overview and Break-Even Analysis of Bremend Ltd.Bremend Ltd is a maker of computer stands with unique financial characteristics that affect its profitability. The company’s fixed costs are $500,000, regardless of production amount. Each computer stand sells for $120, with a variable cost of $70 per unit. This yields a contribution margin of $50 per unit, computed by deducting the variable cost from the selling price ($120 – $70 = $50).The factory’s maximum production capacity is 20,000 units. To calculate the break-even threshold, where total revenues equal total costs, split fixed costs by contribution margin per unit.\[\text{break-even point (units)} = \frac{\text{fixed costs}}{\text{contribution margin per unit}} \]\[\text{Break-Even Point} = \frac{\$500,000}{\$50} = 10,000 \text{ units} \].Therefore, Bremend Ltd needsSell 10,000 units to cover all fixed and variable expenditures. At the break-even point, selling 10,000 units generates $1,200,000 in revenue ($120 per unit) and $700,000 in variable costs ($70 per unit).Beyond the break-even threshold, each extra unit sold increases profit. Bremend Ltd expects to earn $1,800,000 in revenue (15,000 units x $120 per unit) and $1,050,000 in variable costs (15,000 units x $70 per unit). After subtracting the fixed expenses from the overall contribution margin (revenue minus variable costs), the greatest profit possible is:Profit = \text{Total Contribution Margin} minus \text{Fixed Costs} \][\text{max profit} = \$750,000 – \$500,000 = \$250,000 \]This research shows that Bremend Ltd can make a maximum profit of $250,000 if it sells 15,000 units as planned.\[\text{Total Contribution Margin} = (\text{Selling Price} – \text{Variable Cost}) �times \text{Units Sold} \]\[\text{Total Contribution Margin} = \$50 * 15,000 = \$750,000 \]\[\text{Maximum
Review the scenario and watch this week’s videos before you complete the activity below. This scenario can also be found in the “Problems – Series A” section 8-19A of Ch. 8, “Performance Evaluation” o
Review the scenario and watch this week’s videos before you complete the activity below. This scenario can also be found in the “Problems – Series A” section 8-19A of Ch. 8, “Performance Evaluation” of Fundamentals of Managerial Accounting Concepts. Scenario: The Redmond Management Association held its annual public relations luncheon in April Year 2.