help here is my work Your answer is partially correct. Try again Midlands Inc. h
ID: 2545256 • Letter: H
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help here is my work
Your answer is partially correct. Try again Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company' sales $2,340,000; total costs and expenses $2,185,000; and net loss $-155,000. Costs and expenses consisted of the f s income statement showed the following results from selling 78,000 units of product: net Total $1,511,000 521,000 153,000 $2,185,000 $1,018,000 94,000 58,000 $1,170,000 $493,000 427,000 95,000 $1,015,000 Selling expenses Administrative expenses Management is considering the following independent alternatives for 2017 1. Increase unit selling price 20% with no change in costs and expenses 2 : Change the compensation of salespersons from fixed annual salaries totaling $202,000 to total salaries o $40,000 plus a 5% commission on net sales Purchase new high-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 2017. (Round contribution margin ratio to 2 decimal places e.g. o.25 and final answer to o decimal places, e.g. 2,510.) Break-even point b) 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 o decimal places, e.g. 2,510.) Break-even point Increase selling price 2. Change compensation 24000 a. rthase metinery 582412 Alternative 1 Which course of action do you recommend? Click if you would like to show work for this question : QExplanation / Answer
Req A: Sales: 2340000 Less: variable cost 1170000 Contribution margin. 1170000 CM ratio: Contribution / Net sales *100 = 1170,000 /2340,000 *100 = 50% Break even point in $: Fixed cost / CM ratio *100 = $ 1015,000 /50% = $ 2030,000 Req B: Alternative-1 Alternative-2 Alternative-3 Sales revenue Alternative 1(2340000+20%) 2808000 2340000 2340000 Less: Variable cost: COGS 1018000 1018000 755500 Alternative 3(1511000*50%) Selling expense 94000 211000 94000 Alternative 2(94000+5% of $2340000) Admin expense 58000 58000 58000 Contribution margin 1638000 1053000 1432500 Fixed cost COGS 493000 493000 755500 Alternative 3(1511000*50%) Selling expense 427000 265000 427000 Alternative 2(427000-202000+40000) Admin expense 95000 95000 95000 Total Fixed cosst 1015000 853000 1277500 Net Income 623000 200000 155000 CM ratio (Contribution /Sales*100) 58.33% 45% 61.22% Break even in $ (Fixed cost / CM ratio) 1740099 1895556 2086736 BREAK-Even Point Alternative -1 1,740,099 Alternative -2 1,895,556 Alternative-3 2,086,736 Alternative-1 of increasing the Selling price is recommended
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