Number 8

Determine the net income, assuming 1, 800 haircuts are given in a month. Griffey Manufacturing had a bad year in 20 times 8. For the first time in its history it operated at a loss. The company's income statement showed the following results from selling 60,000 units of product: Net sales $1, 500,000: total costs and expenses $1, 740,000: and net loss $240,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1, 200,000 $780,000 $420,000 Selling expenses 420,000 75,000 345,000 Administrative expenses 120,000 45,000 75,000 $1, 740,000 $900,000 $840,000 Management is considering the following independent alternatives for 20 times 9. 1. Increase unit selling price 20% with fixed costs increasing by $40,000 and sales volume (units) decreasing by 12% 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 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 good sold to 50: 50. Instructions a. Compute the break-even point in dollars for 20 times 8. b. Compute the break-even point in dollars under each of the alternative courses of action. Which course of action do you recommend? Tyson Company bottles and distributes NO-KAL, a diet soft drink. The beverage is sold for 40 cents per 16-ounce bottle to retailers, who charge customers 60 cents per bottle. At full (100%) plant capacity, management estimates the following revenues and costs