Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 540,500 units of product: sales $2,702,500, total costs and expenses $2,810,600, and net loss $108,100. Costs and expenses consisted of the amounts shown below.
Total |
Variable |
Fixed |
||||
Cost of goods sold | $2,313,340 | $1,718,790 | $594,550 | |||
Selling expenses | 270,250 | 99,452 | 170,798 | |||
Administrative expenses | 227,010 | 73,508 | 153,502 | |||
$2,810,600 | $1,891,750 | $918,850 |
Management is considering the following independent alternatives
for 2018.
1. | Increase unit selling price 21% with no change in costs, expenses, and sales volume. | |
2. | Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 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 | $ |
(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 | % | |
Contribution margin for alternative 2 | % |
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 | $ | |
Break-even point for alternative 2 | $ |
Which course of action do you recommend?
Alternative 1Alternative 2
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s incom...
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Your answer is partially correct. Try again. Tanek Corp.'s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 520,500 units of product: sales $2,602,500, total costs and expenses $2,706,600, and net loss $104,100. Costs and expenses consisted of the amounts shown below. Fixed Cost of goods sold Selling expenses Administrative expenses Total $2,227,740 260,250 218,610 $2,706,600 Variable $1,655,190 95,772 70,788 $1,821,750 $572,550...
Problem 11-3 Pina Colada Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 585,500 units of product: sales $2,927,500, total costs and expenses $3,044,600, and net loss $117,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,505,940 $1,861,890 $644,050 Selling expenses 292,750 107,732 185,018 Administrative expenses 245,910 79,628 166,282 $3,044,600 $2,049,250 $995,350 Management...
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Crane 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 590,500 units of product: sales $2,952,500, total costs and expenses $3,050,875, and net loss $98,375. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,507,615 $2,025,415 $482,200 Selling expenses 295,250 108,652 186,598 Administrative expenses 248,010 80,308 167,702 $3,050,875 $2,214,375 $836,500 Management is considering the...
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Problem 18-04A Crane 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 590,500 units of product: sales $2,952,500, total costs and expenses $3,050,875, and net loss $98,375. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses Total $2,507,615 295,250 248,010 $3,050,875 Variable $2,025,415 108,652 80,308 $2,214,375 Fixed $482,200 186,598 167,702 $836,500 Management is...
Problem 18-04A Crane 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 585,500 units of product: sales $2,927,500, total costs and expenses $3,024,875, and net loss $97,375. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,486,215 $2,008,265 $477,950 Selling expenses 292,750 107,732185,018 Administrative expenses 245,910 79,628 166,282 $3,024,875 $2,195,625 $829,250 Management is considering...