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Crane Corp.'s sales slumped badly in 2022. For the rst time in its history, it operated at a loss. The company's income statement showed the
Crane Corp.'s sales slumped badly in 2022. For the rst time in its history, it operated at a loss. The company's income statement showed the following results from selling 590,500 units of product: sales 552952.500. total costs and expenses $3,050,875, and net loss $98375. Costs and expenses consisted of the following amounts. Total Variable Fixed Cost ofgoods sold $2,507,615 $2,025,415 $482,200 Selling expenses 295.250 108.652 186,598 Administrative expenses 248.010 80.308 167,702 $3,050,875 $22 14,375 $836,500 Management is considering the following independent alternatives for 2023. 1. Increase the unit selling price 25% with no change in total costs, total expenses, and sales volume. 2. Change the compensation of sales personnel from xed annual salaries totaling $177,150 to total salaries of $70,860 plus a 5% commission on sales. All other total costs, total expenses. and total sales remain unchanged. (a) Compute the break-even point in sales dollars for 2022. Break-even point 3 (b) Compute the contribution margin ratio under each of the alternative courses of action. Contribution margin ratio for alternative 1 % Contribution margin ratio for alternative 2 96 Compute the break-even point in sales dollars 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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