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Ivanhoe Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement
Ivanhoe Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 68,800 units of product: net sales $1,720,000; total costs and expenses $1.922.100; and net loss $202,100. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,348,480 $903,000 $445,480 Selling expenses 444.620 79,120 365,500 Administrative expenses 129,000 49,880 79,120 $1,922,100 $1,032,000 $890,100 Management is considering the following independent alternatives for 2022. 1. Increase unit selling price 25% with no change in costs and expenses 2. 3. Change the compensation of salespersons from fixed annual salaries totaling $172,000 to total salaries of $34,400 plus a 5% commission on net sales. 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 sales dollars for 2021. (Round contribution margin ratio to 4 decimal places eg. 0.2512 and final answer to O decimal places, eg. 2,510) Break-even point (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to O decimal places. eg. 2,510) 1 Increase selling price $ 2. Change compensation $ 3. Purchase machinery $ Break-even point Which course of action do you recommend eTextbook and Media Save for Later Alternative 1 Alternative 2 Alternative 3 Attempts: 0 of 3 used Submit Answer
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