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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
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
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