Question
Wildhorse Manufacturings sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the
Wildhorse Manufacturings sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $ 2,340,000; total costs and expenses $ 2,613,000; and net loss $ 273,000. Costs and expenses consisted of the amounts shown below: Total Variable Fixed Cost of goods sold $ 1,755,000 $ 1,209,000 $ 546,000 Selling expenses 624,000 162,500 461,500 Administrative expenses 234,000 149,500 84,500 $ 2,613,000 $ 1,521,000 $ 1,092,000 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $ 260,000 to total salaries of $ 26,000 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.
Calculate the break-even point in dollars for 2022.
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