The Falcon Corporation has the capacity to manufacture 400,000 bird houses per year. At that level of production, its variable costs are $1,000,000 and its fixed costs are $500,000. Budget projections for next year show sales of 300,000 bird houses at $5 each.
1. What is the break-even point for the Falcon Corporation?
2. At 300,000 bird houses, what is the projected profit? Prepare an income statement ro prove your answer.