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Blossom Inc. had a bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement
Blossom Inc. had a bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 64,000 units of product: net sales $1,600,000; total costs and expenses $1,788,000; and net loss $188,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,254,400 $840,000 $414,400 Selling expenses 413,600 73,600 340,000 Administrative expenses 120,000 46,400 73,600 $1,788,000 $960,000 $828,000 Management is considering the following independent alternatives for 2025. 1. 3. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $160,000 to total salaries of $32,000 plus a 5% commission on net sales. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point in sales dollars for 2024. (Round contribution margin ratio to 4 decimal places eg. 0.2512 and final answer to O decimal places, eg. 2,510) Break-even point 2.070,000 (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2025. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to O decimal places, e.g. 2,510) Break-even point 1. Increase selling price $ 1592,308 2. Change compensation. $ 1,994.286 3. Purchase machinery $ 2,134,857 Which course of action do you recommend? Alternative 2 v
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