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Need some help with the following question, the last course of action question has drop-down answers of alternative, 1,2,3. Thanks! Cullumber Inc. had a bad
Need some help with the following question, the last course of action question has drop-down answers of alternative, 1,2,3. Thanks!
Cullumber Inc. had a bad year in 2021. For the rst time in its history, it operated at a loss. The company's income statement showed the following results from selling 84,800 u nits of product: net sales $2,120,000: total costs and expenses $2,369,100; and net loss $249,100. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,662,030 $1,113,000 $549,030 Selling expenses 543,020 97,520 450,500 Administrative expenses 159,000 61,400 97,520 $2,369,100 $1,222,000 $1,097,100 Management is considering the following independent alternatives for 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from xed annual salaries totaling $212,000 to total salaries of $42,400 plus a 5% commission on net sales. 3. Purchase new hightech factory machinery that will change the proportion between variable and xed cost of goods sold to 50:50. [a] Compute the breakeven point in sales dollars for 2021. {Round contribution margin ratio to 4 decimal places 2.3: 0.2512 and nal answer to 0 decimal places, 9,3. 2,510.) Breakeven point $ lb) Compute the breakeven point in sales dollars under each of the alternative courses of action for 2022. {Round contribution margin man to 3 decimal places ea. 0.251 and nal answers to 0 daclnml places, 2,3. 2,510.] Break-even point 1. Increase selling price $ 2. Change compensation $ 3. Purchase machinery $ Which course of action do you recommend? vStep by Step Solution
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