Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Topic: The Break-even Point You will discuss how cost behavior helps management plan operations and decide between alternative courses of action. You will also see

image text in transcribed
Topic: The Break-even Point You will discuss how cost behavior helps management plan operations and decide between alternative courses of action. You will also see how important variable costs and fixed costs are in determining the total costs under the high-low method, calculating the break-even point, and completing the cost-volume-profit analysis. Scenario: DessertsPlus Inc. was founded 2 years ago and has had declining sales for the past 2 years: The most recent income statement for 2022 shows the following results selling 104,535 units which resulted in sales of $2,404,305: DessertsPlus Income Total Variable Fixed Statement: 2022 Cost of goods $2,120,000 $1,591,655 $528,345 sold Selling expenses 245,920 90,990 154,930 Administrative 197.160 67,034 130,126 expenses $2,563,080 $1,749,679 $813,401 The owners are considering the following independent alternatives going forward for the coming year. 1. Increasing the unit prices by either 15% and 20% without changing selling and administrative expenses. 2. Moving their business to a less expensive lease location saving the company $120.000 per year. 3. Change the compensation of sales personnel from fixed annual salaries totaling $150,000 to total salaries of $60,000 plus 4% commission on sales. All other total costs total expenses and total sales remain unchanged. Provide the following: Compute and explain the break-even point in sales dollars for 2022. -Compute and explain the break-even point in sales dollars under each of the alternative courses of action. - What course of action do you recommend and why? Return to Unit 5 Discussion Instructions

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cornerstones Of Financial Accounting

Authors: Jay Rich, Jeff Jones

3rd Edition

1285424409, 978-1285423678

More Books

Students also viewed these Accounting questions

Question

Contrast compensation and overcompensation in Adlers theory.

Answered: 1 week ago