Blossom Inc. had a bad year in 2026. For the first time in its history, it...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Blossom Inc. had a bad year in 2026. 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 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. 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. 3. 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 2026. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to O decimal places, e.g. 2,510.) Break-even point $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to O decimal places, e.g. 2,510.) 1. Increase selling price A 2. Change compensation +A $ 3. Purchase machinery $ Which course of action do you recommend? Break-even point Blossom Inc. had a bad year in 2026. 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 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. 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. 3. 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 2026. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to O decimal places, e.g. 2,510.) Break-even point $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to O decimal places, e.g. 2,510.) 1. Increase selling price A 2. Change compensation +A $ 3. Purchase machinery $ Which course of action do you recommend? Break-even point
Expert Answer:
Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118033890
3rd Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
Posted Date:
Students also viewed these accounting questions
-
What strategic choices does Poonawalla have for honoring SIl's supply commitment to its global partners and for meeting vaccine demand in his own country?
-
Ethiopian Civil Service University Department of Public Financial Management and Accounting Advanced Cost and Management Accounting Work Sheet on Chapter I, II and III General instruction: Attempt...
-
Keppel Manufacturing had a bad year in 2010. For the first time in its history it operated at a loss.The company's income statement showed the following results from selling 60,000 units of product:...
-
In Exercises 8194, begin by graphing the absolute value function, f(x) = |x| . Then use transformations of this graph to graph the given function. h(x) = x +31-2
-
How is the Wilkss Lambda statistic obtained from the within-group and total SCP matrices? In a one-way ANOVA, what does Wilkss Lambda correspond to? How is Wilkss Lambda interpreted in a MANOVA?
-
When applying Kirchhoff 's rules, one of the essential steps is to mark each resistor with plus and minus signs to label how the potential changes from one end of the resistor to the other. The...
-
Which of the following statements best describes what is usually true regarding the estimates included in feasibility studies? a. Development time and cost are usually less than estimated; benefits...
-
The unadjusted trial balance of Canton Air Purification System at December 31, 2014, and the data needed for the adjustments follow. Adjustment data at December 31 follow: a. On December 15, Canton...
-
Valley Designs issued a 90-day, 8% note for $54,000, dated April 15, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest. a. Determine the due date of the...
-
8. 10 Points True Machines, Inc. would like to develop a plan for building and shipping their Premium Generator product to satisfy customer orders. The Murrysville plant can produce 17 units and the...
-
Because customers live in different states, it is often advantageous to create a query where you can change one criteria using a parameter query. Open the StatesParameter query in Design View. Add...
-
Ben and Joel are raising money for their class trip by selling wrapping paper. Ben raised $43.50 by selling 12 rolls of solid paper and 9 rolls of printed paper. Joel raised $51.50 by selling 8 rolls...
-
1. If gravity increases, what will happen to horizontal range of the projectile ball? 2. If gravity decreases, what will happen to horizontal range of the projectile ball? 3. If the mass of...
-
Question C: No interest payments were made on the company's $15,000 12% note payable during 2022. This is what I have: B c 12/31/2022 Interest Receivable Interest Revenue 12/31/2022 Interest Expense...
-
1) Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,500 pounds of copper. The joint cost related to the operation was...
-
Explain the two descriptions of virtue ethics, the right action is the mesotes
-
Write the expression in radical notation. Then evaluate the expression when the result is an integer. 23 -1/2
-
Decade Petroleum incurred and paid the following costs during 2016: Record Decade Petroleum's transactions. Lease A Unproved Lease B Unproved Lease C Proved Lease D Proved Purchased Acquisition costs...
-
The Kincaid Oil Company has unproved property costs of $40,000 at January 1, 2016. During 2016, Kincaid incurred $400,000 drilling costs on Lease A. An 8%, $500,000 note is outstanding during the...
-
Duck Petroleum hires a drilling contractor to drill a well to the depth of 8,000 feet at a cost of $300,000. The $300,000 cost includes $5,000 for surface casing. Any drilling to be completed after...
Study smarter with the SolutionInn App