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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 showed
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 86,400 units of product: net sales $2,160,000; total costs and expenses $2,413,800; and net loss $253,800. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Total $1,693.440 558,360 162.000 Break-even point $ $2,413,800 Variable $1,134,000 99,360 62,640 Fixed $559,440 Management is considering the following independent alternatives for 2022. 459,000 99,360 $1,296,000 $1,117,800 Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $216,000 to total salaries of $43,200 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 e.g. 0.2512 and final answer to O decimal places, e.g. 2,510.)
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