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2. Rose Corporation 's sales declined sharply in 2020. This was the first time the company had ever experienced a loss. The income statement for
2. Rose Corporation 's sales declined sharply in 2020. This was the first time the company had ever experienced a loss. The income statement for the year showed the following results from selling 500,000 units of product: Sales $2,000,000, total costs and expenses $2,080,000, therefore a net loss of $80,000. Costs and expenses consisted of the following: Total Cost of goods sold $1,712,000 Selling expenses 200,000 Administrative expenses_168,000 $2,080,000 Variable $1,232,000 73,600 54,400 $1,360,000 Fixed $480,000 126,400 113,600 $720,000 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price by 20% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $120,000 to total salaries of $48,000 plus a 4% commission on sales. Instructions a. Compute the break-even point in dollars for 2020. b. Compute the break-even point in dollars under each of the above alternatives. (Round all ratios to the nearest full percent.) Which alternative do you recommend
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