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Calculate the break-even point in dollars under each of the alternative courses of action - Break-even point if unit selling price increases by 30% -
Calculate the break-even point in dollars under each of the alternative courses of action
- Break-even point if unit selling price increases by 30%
- Break-even point if there is a change in compensation
- Break-even point if there is a purchase of new high-tech factory machinery
Carla Vista Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 70,800 units of product: net sales $2,124,000; total costs and expenses $2,371,800; and net loss $247,800. Costs and expenses consisted of the amounts shown below: Total Fixed Cost of goods sold Selling expenses Administrative expenses $1,593,000 566,400 212,400 $2,371,800 Variable $1,097,400 147,500 135,700 $1,380,600 $495,600 418,900 76,700 $991,200 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $236,000 to total salaries of $23,600 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 50:50Step by Step Solution
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