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Sheridan Inc. had a bad year in 2 0 2 1 . For the first time in its history, it operated at a loss. The
Sheridan Inc. had a bad year in For the first time in its history, it operated at a loss. The company's income statement showed the
following results from selling units of product: net sales $; total costs and expenses $; and net loss
$ Costs and expenses consisted of the following.
Management is considering the following independent alternatives for
Increase unit selling price with no change in costs and expenses.
Change the compensation of salespersons from fixed annual salaries totaling $ to total salaries of $ plus a
commission on net sales.
Purchase new hightech factory machinery that will change the proportion between variable and fixed cost of goods sold to
:
a Compute the breakeven point in sales dollars for Round contribution margin ratio to decimal places eg and final
answer to decimal places, eg
Breakeven point $
b Compute the breakeven point in sales dollars under each of the alternative courses of action for Round contribution margin
ratio to decimal places eg and final answers to decimal places, eg
Breakeven point
Increase selling price $
Change compensation $
Purchase machinery $
Which course of action do you recommend?
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