Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gorham Manufacturing's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed

image text in transcribedimage text in transcribed

Gorham Manufacturing'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 61,000 units of product: net sales $1,769,000; total costs and expenses $1,939,468; and net loss $170,468. Costs and expenses consisted of the amounts shown below: Total Variable Fixed Cost of goods sold $1,293,468 $870,780 $422,688 Selling expenses 468,000 120,000 348,000 Administrative expenses 178,000 106,000 72,000 $1,939,468 $1,096,780 $842,688 Management is considering the following independent alternatives for 2021. 1. Increase the unit selling price by 25% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $191,000 to total salaries of $20,000 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) Your answer is correct. Calculate the break-even point in dollars for 2020. Break-even point +A $ 2217600 i

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Tools for Business Decision Making

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

4th Canadian edition

1118856996, 978-1118856994

More Books

Students also viewed these Accounting questions

Question

Explain all drawbacks of the application procedure.

Answered: 1 week ago

Question

The number of ways eight cars can line up in a row for a car wash

Answered: 1 week ago