Question
Noble company's projected income statement shows the following results from selling 100,000 units of product. Net sales 2,000,000, total expenses $1,760,000, net income $240,000. The
Noble company's projected income statement shows the following results from selling 100,000 units of product.
Net sales 2,000,000, total expenses $1,760,000, net income $240,000. The details of the expenses are as following:
Fixed Variable Total
Cost of goods sold $420,000 $780,000 $1,200,000
Selling Expenses 340,000 100,000 440,000
Administrative Expenses 60,000 60,000 120,000
Total Expenses $820,000 $940,000 $1,760,000
Compute the break-even point in dollar and units for each of the independent alternatives:
1. Increase unit selling price by 20% with no change in variable or fixed costs.
2. Increase the sales volume by 20% but keep the price per unit the same.
3. Change the compensation of salespersons (selling expenses) to 10% commission of sales with no fixed cost.
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