Question
Cook's manufacturing sales slumped badly in 2009. For the first time in its history, it operated at a loss. The company's income statement showed the
Cook's manufacturing sales slumped badly in 2009. 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: net sales were 1,800,000; total costs and expenses were 2,010,000; and net loss was 210,000. costs and expenses consited of amounts shown bellow:
total variable fixed
COGS 1,350,000 930,000 420,000
Selling exp 480,000 125,000 335,000
Admin exp 180,000 115,000 65,000
total 2,010,000 1,170,000 840,000
management is considering the following independent alternatives for 2010:
- increase the unit selling price by 25% with no change in costs, expenses, and sales volume
- change the compensation of sales person from fixed annual salaries totaling 200,000 to total salaries of $20,000 plus a 5% commission of sales
- purchase new high-tech factory machinery that will change the proportion between variable and fixed COGS to 50:50
Please help! Just want to double check my answers.
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