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pLEASE HELP ME SOLVE THE FOLLOWING QUESTION Crane Inc. had a bad year in 2021. For the first time in its history, it operated at
pLEASE HELP ME SOLVE THE FOLLOWING QUESTION
Crane 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 100,800 units of product: net sales $2,520,000; total costs and expenses $ 2,816,100; and net loss $ 296,100. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $ 1,975,680 $ 1,323,000 $ 652,680 Selling expenses 651,420 115,920 535,500 Administrative expenses 189,000 73,080 115,920 $ 2,816,100 $ 1,512,000 $ 1,304,100 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 fixed annual salaries totaling $ 252,000 to total salaries of $50,400 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) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. answer to 0 decimal places, e.g. 2,510.) Break-even point $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) Break-even point 1. Increase selling price $ 2. Change compensation $ 3. Purchase machinery $ Which course of action do you recommendStep by Step Solution
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