Question
Tanek Corp.s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The companys income statement showed the
Tanek Corp.s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 525,500 units of product: sales $2,627,500, total costs and expenses $2,732,600, and net loss $105,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,249,140 $1,671,090 $578,050 Selling expenses 262,750 96,692 166,058 Administrative expenses 220,710 71,468 149,242 $2,732,600 $1,839,250 $893,350 Management is considering the following independent alternatives for 2018. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $157,650 to total salaries of $63,060 plus a 6% commission on sales. (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, e.g. 1,225.) Break-even point $Entry field with incorrect answer now contains modified data (b) Compute the contribution margin under each of the alternative courses of action. (Round final answer to 0 decimal places, e.g. 1,225.) Contribution margin for alternative 1 Entry field with incorrect answer % Contribution margin for alternative 2 Entry field with incorrect answer % Compute the break-even point in dollars under each of the alternative courses of action. (Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answer to 0 decimal places, e.g. 1,225.) Break-even point for alternative 1 $Entry field with incorrect answer Break-even point for alternative 2 $Entry field with incorrect answer Which course of action do you recommend? Entry field with incorrect answer
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