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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 76,100 units of product: Net sales $ 1,491,560 ; total costs and expenses $ 1,758,600 ; and net loss $ 267,040 . Costs and expenses consisted of the following.
| Â | Â | Total | Â | Variable | Â | Fixed |
| Cost of goods sold | Â | $ 1,208,200 | Â | $ 784,100 | Â | $ 424,100 |
| Selling expenses | Â | 419,300 | Â | 74,000 | Â | 345,300 |
| Administrative expenses | Â | 131,100 | Â | 52,000 | Â | 79,100 |
| Â | Â | $ 1,758,600 | Â | $ 910,100 | Â | $ 848,500 |
Management is considering the following independent alternatives for 2014.
| 1. | Â | Increase unit selling price 29 % with no change in costs and expenses. |
| 2. | Â | Change the compensation of salespersons from fixed annual salaries totaling $ 200,000 to total salaries of $ 37,500 plus a 5% commission on net sales. |
| 3. | Â | Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. |
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