Midlands Inc. had a bad year in 2016. For the first time in its history, It opelated at a loss. The company’s income statement showed the following results from
selllng 29,000 units of product: net sales $1,530,000; total costs and expenses $1,968,000; and net loss $338,000. Costs and expenses consisted of the following. Total Variable Fixed
Cost of goods sold $1,300,000 $795, 000 $504, 000
Selllng expenses 520,000 94,000 425,000
Administrative expenses 143,000 53,000 90,000
$1,963,000 $943, 000 $1,020,000 Management is considering the followlng independent alternatives for 201?. 1. Increase unit selling price 25% wlth no change in costs and expenses.
2. Change the compensatlon of salespersons from fixed annual salaries totaling $200,000 to total salaries of $43,000 plus a 5% commission on net sales.
3. Purchase new hlgh-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 2015. {Round contribution margin ratio to 2 decimai piaces 2.9. 0.25 ansiI flnai answer to 0 decimai piacea e.g.
2,510.} Brea k-even point $ (b) Compute the break-even point in dollars under each of the alternatlve courses of action for 201?. (Round contribution margin ratio to 4 decimai piaces e.g.
0.2512 and iinai answers to D decimai piaces, e.g. 2,510.) Break-even point 1. Increase selllng price $ 2. Change compensation $l l 3. Purchase rnarhinerv 2| I
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Posted 20 Jun 2017 01:06 AM
My Price 12.00
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