Question 4 View Policies Current Attempt in Progress Midlands Inc. had a bad year in 2019. 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 $2.210,000; and net loss $210,000. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold Selling experses Administrative expenses $1,542,000 $1,051,000 $491,000 522,000 99,000 429.000 146,000 56,000 90,000 $2,210,000 $1,200,000 $1,010,000 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 20% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $205,000 to total salaries of $42.000 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and foved cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2019. (Round contribution margin ratio to 4 decimal placeres. 0.2512 and fmal answer to decimal places, eg. 2,510) Rreak even point $ b) Compute the break-even point in dollars under each of the alternative course of action for 2020. (Round contribution marginaliolo 3 decimal places C90.251 and final answers to decinal places, c.2,510.) Break-even point 1 Increase selling price $ 2 3. Change compensation Purchase machinery $ $ Which course of action do you recommend? Saw for later Attempts: 0 of 7 used Su Arnar Send to Gradebook < Prev

Name: Techwhiff
Address: 1520 Lavalette Ave, Elkins, WV 26241, USA, Elkins, 26241, US
Telephone: +1 681-298-8325
Price range: 10000

Solution: Sales Less: Total VC Total CM /Sales CM ratio 2000000 1200000 800000 2000000 0.4000 2525000 BEP in dollars=FC/CM ratio 1010000/0.40 2000000 80000 25 b1) INCREASE SELLING PRICE Current sales / units Current SP X (1+% increase in SP) New SP Less : VC per unit CM per unit / New SP CM ratio 120% 30 15 30 0.500 2020000 BEP in dollars=FC/CM ratio 1010000/0.50 b2) CHANGE COMPENSATION SP 25.00 15.00 1.25 Current VC Add: comission Revised VC per unit CM per unit / SP CM ratio 16.25 8.75 25.00 0.350 2420000 BEP in dollars=FC/CM ratio |(1010000-205000+42000)/0.35 2000000 b3) Current sales Less : VC Total COGS x 50% Total variable COGS Variable Selling expenses Variable Administrative expenses Total VC Total CM / Sales CM ratio 1542000 50.00% 771000 93000 56000 920000 1080000 2000000 0.540 2388889 BEP in dollars=FC/CM ratio (1010000-491000+771000/0.54 which course of action do you recommend? INCREASE SELLING PRICE working: calcualtion of VC per unit Cost of goods sold Selling expenses Administrative expenses ) Total Variable Fixed VC per unit a b c d=b/80000 15420001051000| 491000l 13.1375 | 522000 93000 429000 1.1625 146000 56000 90000 0.7000 2210000 1200000 1010000 15.0000 .

Question 4 View Policies Current Attempt in Progress …

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Solution: Sales Less: Total VC Total CM /Sales CM ratio 2000000 1200000 800000 2000000 0.4000 2525000 BEP in dollars=FC/CM ra

2000000 b3) Current sales Less : VC Total COGS x 50% Total variable COGS Variable Selling expenses Variable Administrative ex

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Question 4 View Policies Current Attempt in Progress Midlands Inc. had a bad year in 2019....

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