lands Inc. had a bad year in 2016. For the first time in its
history, it operated at a loss. The company’s income statement
showed the following results from selling 80,000 units of product:
net sales $2,400,000; total costs and expenses $2,225,000; and net
loss $-175,000. Costs and expenses consisted of the
following.
Total |
Variable |
Fixed |
||||
---|---|---|---|---|---|---|
Cost of goods sold | $1,564,000 | $1,052,000 | $512,000 | |||
Selling expenses | 512,000 | 91,000 | 421,000 | |||
Administrative expenses | 149,000 | 57,000 | 92,000 | |||
$2,225,000 | $1,200,000 | $1,025,000 |
Management is considering the following independent alternatives
for 2017.
1. | Increase unit selling price 25% with no change in costs and expenses. | |
---|---|---|
2. | Change the compensation of salespersons from fixed annual salaries totaling $195,000 to total salaries of $42,000 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. |
(a) Compute the break-even point in dollars for
2017. (Round contribution margin ratio to 2 decimal
places e.g. 0.25 and final answer to 0 decimal places, e.g.
2,510.)
Break-even point |
$enter the break-even point in dollars rounded to 0 decimal places |
(b) Compute the break-even point in dollars under
each of the alternative courses of action. (Round
contribution margin ratio to 4 decimal places e.g. 0.2512 and final
answers to 0 decimal places, e.g. 2,510.)
Break-even point |
||||
---|---|---|---|---|
1. | Increase selling price |
$enter a dollar amount rounded to 0 decimal places |
||
2. | Change compensation |
$enter a dollar amount rounded to 0 decimal places |
||
3. | Purchase machinery |
$enter a dollar amount rounded to 0 decimal places |
Which course of action do you recommend? select a course of action
using the break-even analysis
Alternative 1Alternative 2Alternative
3
lands Inc. had a bad year in 2016. For the first time in its history, it...
Midlands Inc. had a bad year in 2016. 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 $2,185,000; and net loss $-155,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,511,000 $1,018,000 $493,000 Selling expenses 521,000 94,000 427,000 Administrative expenses 153,000 58,000 95,000 $2,185,000 $1,170,000 $1,015,000 Management is considering the...
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Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 79,000 units of product: net sales $1,580,000; total costs and expenses $1,968,000; and net loss $388,000. Costs and expenses consisted of the following. Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following...
Midlands Inc. had a bad year in 2019. 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 $1,560,000; total costs and expenses $1,935,960; and net loss $375,960. Costs and expenses consisted of the following Cost of goods sold Selling expenses Total $1,258,000 524,960 153,000 $1,935,960 Variable Fixed $785,000 $473,000 93.000 431.960 58,000 95,000 $936,000 $999,960 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1.780.200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold Selling expenses $1,106,000 $598,000 $508,000 522,200 95,000 427,200 152,000 57,000 95,000 $1,780,200 $750,000 $1,030,200 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $ 1,500,000; total costs and expenses $ 1,900,000; and net loss $400,000. Costs and expenses consisted of the following. Total Variable Fixed 1,240,000 $755,000 $485,000 515,000 90,000 425,000 Administrative expenses 145,000 55,000 90,000 $1,900,000 $900,000 $1,000,000 Cost of goods sold Selling expenses Management is...
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,997,300; and net loss $22,300. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold Selling expenses $1,345,250 $840,500 $504,750 506,050 91,000 415,050 146,000 56,000 90,000 $1,997,300 $987,500 $1,009,800 Administrative expenses Management is considering the...
Midlands Inc. had a bad year in 2019. 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 $1,560,000; total costs and expenses $1,785,000; and net loss $225,000. Costs and expenses consisted of the following: Cost of goods sold Selling expenses Administrative expenses Total Variable Fixed $1,121,600 $631,000 $490,600 511,400 92,000 419,400 152,000 57,000 95.000 $1,785,000 $780,000 $1,005,000 Management is considering the...