Question
IvanhoeCorp.'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
IvanhoeCorp.'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 selling515,500units of product: sales $2,577,500, total costs and expenses $2,673,960, and net loss $96,460. Costs and expenses consisted of the amounts shown below.
Total
Variable
Fixed
Cost of goods sold$2,199,700$1,690,840$508,860Selling expenses257,75094,852162,898Administrative expenses216,51070,108146,402$2,673,960$1,855,800$818,160
Management is considering the following independent alternatives for 2021.
1.Increase unit selling price20% with no change in costs, expenses, and sales volume.2.Change the compensation of salespersons from fixed annual salaries totaling $154,650to total salaries of $61,860plus a4% commission on sales.
(a)
Compute the break-even point in dollars for 2020.
Break-even point$
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