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Blossom Corp.'s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the
Blossom Corp.'s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 575,500 units of product: sales $2,877,500, total costs and expenses $2,984,880, and net loss $107,380. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses Total $2,455,420 287,750 241,710 $2,984,880 Variable $1,887,640 105,892 78,268 $2,071,800 Fixed $567,780 181,858 163,442 $913,080 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 20% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $172,650 to total salaries of $69,060 plus a 4% commission on sales. v (a) Your answer is correct. Compute the break-even point in dollars for 2020. Break-even point 3,261,000 (b) Compute the contribution margin under each of the alternative courses of action. (Round contribution margin ratio to 0 decimal places, e.g. 50%.) Contribution margin for alternative 1 % Contribution margin for alternative 2 % Compute the break-even point in dollars using the contribution margin ratio under each of the alternative courses of action. Break-even point for alternative 1 $ Break-even point for alternative 2 $ Which course of action do you recommend
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