Accounting Assignment Compute the break-even point i
OliviaSmart (Not rated)
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For the fist time in its history, it operated at a loss. The company's income statement showed the following results from selling | |||
500,000 units of product: sales $2,500,000 , total costs and expenses $2,600,000, and net loss $100,000. Costs and expenses consisted of the amounts shown below: | |||
Total | Variable | Fixed | |
Costs of goods sold | $2,140,000 | $1,590,000 | $550,000 |
Selling expenses | 250,000 | 92,000 | 158,000 |
Adminstrative expenses | 210,000 | 68,000 | 142,000 |
$2,600,000 | $1,750,000 | 850,000 | |
Management is considering the following independent alternatives for 2018 | |||
1. Increase selling price 20% with no change in costs, expenses, and sales volume . | |||
2. Change the compensation of salesperson from fixed annual salaries totaling $150,000 to total salaries of $60,000 plus a 5% commission on sales. | |||
Instructions | |||
(a) Compute the break-even point in dollars for 2017. | |||
(b) Compute the break-even point dollars under each of the alternatives courses of action, (Round all ratios to nearest full percent). Which course of action do you recommend? |
- 8 years ago
Solution Accounting Assignment Compute the break-even point
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