Answered step by step
Verified Expert Solution
Question
1 Approved Answer
How do I get the purchase machinery break even point? Midlands Inc. had a bad year in 2016. For the nirst time in its history,
How do I get the purchase machinery break even point?
Midlands Inc. had a bad year in 2016. For the nirst time in its history, it operated at al 55. The company 5 Income statement showed the Tollowing results from selling 80,000 units of product: net sales $1,600,000; total costs and expenses $1,815,000; and net loss $215,000. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,154,000 $650,000 $504,000 Selling expenses 514,000 93,000 421,000 Administrative expenses 147,000 57,000 90,000 $1,815,000 $800,000 $1,015,000 Management is considering the following independent alternatives for 2017. 1. Increase unit selling price 30% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $199,000 to total salaries of $45,000 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) Compute the break-even point in dollars for 2017.(Round contribution margin ratio to 2 decimal places e.g. 0.25 and final answer to 0 decimal places, e.g. 2,510.) Break-even point $ 2,030,000 i (b) Compute the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to O decimal places, e.g. 2,510.) Break-even point 1. Increase selling price $ 1,649,388 2. Change compensation $ 1,913,340 3. Purchase machinery 2,096,858Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started