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Question 9 of 13 -/1 E Sunland Inc had a bad year in 2019. For the first time in its history, it operated at a
Question 9 of 13 -/1 E Sunland 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 following results from selling 79,000 units of productnet sales $1,580,000; total costs and expenses $1.637,040; and net loss $57,040. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $972.000 $486,000 $486,000 Selling expenses 517,040 90,000 427,040 Administrative expenses 148,000 56,000 92,000 $1.637,040 $632,000 $1,005.040 Management is considering the following independent alternatives for 2020 1 2 Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $203,000 to total salaries of $36,985 plus a 5% commission on net sales Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50 3. Question 9 of 13 -/1 (a) Compute the break even point in dollars for 2019. (Round contribution margin ratio to 4 decimal places eg. 0.2512 and final answer too decimal places, eg. 2,510.) Break-even point $ 2512600 (b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to decimal places, eg. 2,510) Break-even point 1 Increase selling price $ 2 Change compensation $ 3. Purchase machinery $ Which course of action do you recommend? Alternative 1
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