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Problem 19 OTA Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's
Problem 19 OTA Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the fe consisted of the following. Cost of goods sold Selling expenses Administrative expenses Total $1,542,000 522,000 146,000 $2,210,000 Variable $1,051,000 93,000 56,000 $1,200,000 Fixed $491,000 429,000 90,000 $1,010,000 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 20% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $205,000 to total salaries of $42,000 plus a 5% commis 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 dollars for 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final Break-even point (b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin rati Break-even point 1. Increase selling price 2. Change compensation 3. Purchase machinery Which course of action do you recommend? CALCULATOR FULL SCREEN PRINTER VERSION BACK nent showed the following results from selling 80,000 units of producti net sales $2,000,000; total costs and expenses $2,210,000; and net loss $210,000. Costs and expense
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