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Cullumber Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the
Cullumber Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 555,500 units of product: sales $2,777,500, total costs and expenses $2,869,375, and net loss $91,875. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,358,315 $1,905,365 $452,950 Selling expenses 277,750 102,212 175,538 Administrative expenses 233,310 75,548 157,762 $2,869,375 $2,083,125 $786,250 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $166,650 to total salaries of $66,660 plus a 5% commission on sales. Compute the break-even point in dollars for 2020. Break-even point $ e Textbook and Media Compute the contribution margin under each of the alternative courses of action. Contribution margin for alternative 1 % Contribution margin for alternative 2 % Compute the break-even point in 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 Alternative 1 Alternative 2 e Textbook and Media
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