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Sunland 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
Sunland 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 575,500 units of product: sales $2,877,500, total costs and expenses $2,973,625, and net loss $96,125. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,444,165 $1,973,965 $470,200 Selling expenses 287,750 105,892 181,858 Administrative expenses 241,710 78,268 163,442 $2,973,625 $2,158,125 $815,500 Management is considering the following independent alternatives for 2021. 1. 2. Increase unit selling price 25% with no change in costs, expenses, and sales volume. Change the compensation of salespersons from fixed annual salaries totaling $172,650 to total salaries of $69,060 plus a 5% commission on sales.
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