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Compute the break-even point in dollars for 2014

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Question 1;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 80,000 units of product: Net sales $2,000,000, total costs and expenses $2,135,000, and net loss $135,000. Costs and expenses consisted of the following.;Total;Variable;Fixed;Cost of goods sold $1,468,000 $950,000 $518,000;Selling expenses 517,000 92,000 425,000;Administrative expenses 150,000 58,000 92,000;$2,135,000 $1,100,000 $1,035,000;Management is considering the following independent alternatives for 2014.;1. Increase unit selling price 25% with no change in costs and expenses.;2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 plus a 5% commission on net sales.;3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.;Your answer is incorrect. Try again.;Compute the break-even point in dollars for 2014. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.);Break-even point;$;LINK TO TEXT;LINK TO VIDEO;Your answer is partially correct. Try again.;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;$;2. Change compensation;$;3. Purchase machinery;$;Which course of action do you recommend?

 

Paper#23901 | Written in 18-Jul-2015

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