MANAGERIAL CHAPTER 6

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Cullumber Manufacturings sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 50,400 units of product: net sales $1,512,000; total costs and expenses $1,688,400; and net loss $176,400. Costs and expenses consisted of the amounts shown below:

		Total		Variable		Fixed
Cost of goods sold		$1,134,000		$781,200		$352,800
Selling expenses		403,200		105,000		298,200
Administrative expenses		151,200		96,600		54,600
		$1,688,400		$982,800		$705,600

Management is considering the following independent alternatives for 2023:

1.	Increase the unit selling price by 30% with no change in costs, expenses, or sales volume.
2.	Change the compensation of salespersons from fixed annual salaries totalling $168,000 to total salaries of $16,800 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)

• Your Answer
• Correct Answer

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Your answer is correct.

Calculate the break-even point in dollars for 2022.

Break-even point

$enter the break-even point in dollars

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Solution

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(b)

Calculate the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 0 decimal places, e.g. 15% and final answers to 0 decimal places, e.g. 5,275.)

Break-even point if unit selling price increases by 30%		$enter a dollar amount rounded to 0 decimal places
Break-even point if there is a change in compensation		$enter a dollar amount rounded to 0 decimal places
Break-even point if there is a purchase of new high-tech factory machinery		$enter a dollar amount rounded to 0 decimal places

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MANAGERIAL CHAPTER 6

Question 3 of 5

10 / 20

View Policies

Show Attempt History

Current Attempt in Progress

Cullumber Manufacturings sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 50,400 units of product: net sales $1,512,000; total costs and expenses $1,688,400; and net loss $176,400. Costs and expenses consisted of the amounts shown below:

		Total		Variable		Fixed
Cost of goods sold		$1,134,000		$781,200		$352,800
Selling expenses		403,200		105,000		298,200
Administrative expenses		151,200		96,600		54,600
		$1,688,400		$982,800		$705,600

Management is considering the following independent alternatives for 2023:

1.	Increase the unit selling price by 30% with no change in costs, expenses, or sales volume.
2.	Change the compensation of salespersons from fixed annual salaries totalling $168,000 to total salaries of $16,800 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)

• Your Answer
• Correct Answer

Correct answer icon

Your answer is correct.

Calculate the break-even point in dollars for 2022.

Break-even point

$enter the break-even point in dollars

eTextbook and Media

Solution

Attempts: 4 of 4 used

(b)

Calculate the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 0 decimal places, e.g. 15% and final answers to 0 decimal places, e.g. 5,275.)

Break-even point if unit selling price increases by 30%		$enter a dollar amount rounded to 0 decimal places
Break-even point if there is a change in compensation		$enter a dollar amount rounded to 0 decimal places
Break-even point if there is a purchase of new high-tech factory machinery		$enter a dollar amount rounded to 0 decimal places

eTextbook and Media

Save for Later

Attempts: 0 of 4 used

Submit Answer