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Ivanhoe Inc. had a bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement
Ivanhoe Inc. had a bad year in 2024. 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 2025. 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. (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2025. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to O decimal places, eg. 2,510.) Break-even point 1. Increase selling price 1711730,77 2. Change compensation 2150000 3. Purchase machinery Which course of action do you recommend? Alternative 1 V
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