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Sandhill Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed
Sandhill Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 585,500 units of product: sales $2,927,500, total costs and expenses $3,035,440, and net loss $107,940. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,496,780 $1,920,440 $576,340 Selling expenses 292,750 107,732 185,018 Administrative expenses 245,910 $3,035,440 79,628 $2,107,800 $927,640 166,282 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 20% with no change in costs, expenses, and volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $175,650 to total salaries of $70,260 plus a 5% commission on sales (a) Your answer is correct. Compute the break-even point in dollars for 2020. Break-even point eTextbook and Media 3313000.00 Attamate-2 of 3 Head (b) Compute the contribution margin under each of the alternative courses of action. Contribution margin for alternative 1 Contribution margin for alternative 2 % % Compute the break-even point in dollars under each of the alternative courses of action Break-even point for alternative 1 $ Break-even point for alternative 2 $ Which course of action do you recommend?
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