bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 88,000 units of product net sales $2.200,000: total costs and expenses $2,458,500; and net loss $258,500. Costs and expenses consisted of the following Cost Selling expenses Administrative expenses 1 is sold- 2 3 Total $1,724,800 568,700 165,000 Variable $1,155.000 101,200 Break-even point $ 63.800 $2,458,500 $1,320,000 Management is considering the following independent alternatives for 2025. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $220,000 to total salaries of $44.000 plus a 5% commission on net sales. Fixed $569,800 467,500 101.200 $1.138,500 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 sales dollars for 2024. (Round contribution margin ratio to 4 decimal places eg 0.2512 and final answer to O decimal places, eg 2.510) (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2025. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to 0 decimal places, eg 2.510) Break-even point
bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 88,000 units of product net sales $2.200,000: total costs and expenses $2,458,500; and net loss $258,500. Costs and expenses consisted of the following Cost Selling expenses Administrative expenses 1 is sold- 2 3 Total $1,724,800 568,700 165,000 Variable $1,155.000 101,200 Break-even point $ 63.800 $2,458,500 $1,320,000 Management is considering the following independent alternatives for 2025. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $220,000 to total salaries of $44.000 plus a 5% commission on net sales. Fixed $569,800 467,500 101.200 $1.138,500 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 sales dollars for 2024. (Round contribution margin ratio to 4 decimal places eg 0.2512 and final answer to O decimal places, eg 2.510) (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2025. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to 0 decimal places, eg 2.510) Break-even point
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:Oriole Inc. had a bad year in 2024. For the first time in its history, it operated at a loss. The company's income statement showed the
following results from selling 88,000 units of product: net sales $2,200,000; total costs and expenses $2,458,500: and net loss
$258,500. Costs and expenses consisted of the following.
Cost of is sold.
Selling expenses
Administrative expenses
1
2
3
Management is considering the following independent alternatives for 2025.
Break-even point $
1.
2
3.
Total
Variable
$1,724,800 $1,155,000
568,700
165,000
63.800
$2,458,500 $1,320,000
Increase selling price
(a) Compute the break-even point in sales dollars for 2024. (Round contribution margin ratio to 4 decimal places eg 0.2512 and final
answer to 0 decimal places, eg 2,510)
Change compensation
Increase unit selling price 25% with no change in costs and expenses.
Change the compensation of salespersons from fixed annual salaries totalling $220,000 to total salaries of $44,000 plus a 5%
commission on net sales.
Purchase machinery
Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to
50:50.
(b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2025. (Round contribution margin
ratio to 3 decimal places eg. 0.251 and final answers to O decimal places, es 2.510)
Break-even point
101,200
Save for Later
Fixed
$
$569,800
467,500
$
101,200
$
Which course of action do you recommend?
$1,138,500
K
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education