Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Part a., I found 103,500 units to break even, at $2,587,500 Part b., alternative 1, I found 63,693 units and $1,990,406 sales to break even.
- Part a., I found 103,500 units to break even, at $2,587,500
- Part b., alternative 1, I found 63,693 units and $1,990,406 sales to break even.
- Part b., alternative 3, I found 97,636 units and $2,440,900 sales to break even.
a P19.1A (LO 1), AN Midlands Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 80,000 units of prod- uct: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following. Fixed Cost of goods sold Selling expenses Administrative expenses Total $1,568,000 517,000 150,000 $2,235,000 Variable $1,050,000 92.000 58,000 $1,200,000 $ 518,000 425,000 92,000 $1,035,000 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 fixed annual salaries totaling $200,000 to total sala- ries 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 goods sold to 50:50. Instructions a. Compute the break-even point in dollars for 2021. b. Compute the break-even point in dollars under each of the alternative courses of action for 2022. (Round to the nearest dollar.) Which course of action do you recommend
- Part a., I found 103,500 units to break even, at $2,587,500
- Part b., alternative 1, I found 63,693 units and $1,990,406 sales to break even.
- Part b., alternative 3, I found 97,636 units and $2,440,900 sales to break even.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started