Cullumber 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 84,800 units of product: net sales $2,120,000; total costs and expenses $2,369,100; and net loss $249,100. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 1. 2. 3. Management is considering the following independent alternatives for 2025. Variable $1,662,080 $1,113,000 Break-even point Total $ 548,020 159,000 $2,369,100 $1,272,000 Increase selling price Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $212,000 to total salaries of $42,400 plus a 5% commission on net sales. (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, e.g. 2,510.) Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. 3. Purchase machinery 97,520 61,480 (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, e.g. 2,510.) $ Change compensation $ Fixed $549,080 450,500 97,520 $ $1,097,100 Break-even point Which course of action do you recommend?
Cullumber 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 84,800 units of product: net sales $2,120,000; total costs and expenses $2,369,100; and net loss $249,100. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 1. 2. 3. Management is considering the following independent alternatives for 2025. Variable $1,662,080 $1,113,000 Break-even point Total $ 548,020 159,000 $2,369,100 $1,272,000 Increase selling price Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $212,000 to total salaries of $42,400 plus a 5% commission on net sales. (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, e.g. 2,510.) Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. 3. Purchase machinery 97,520 61,480 (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, e.g. 2,510.) $ Change compensation $ Fixed $549,080 450,500 97,520 $ $1,097,100 Break-even point Which course of action do you recommend?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...
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Transcribed Image Text:Cullumber 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 84,800 units of product: net sales $2,120,000; total costs and expenses $2,369,100; and net loss
$249,100. Costs and expenses consisted of the following.
Cost of goods sold
Selling expenses
Administrative expenses
1.
2.
2.
3.
Total
$1,662,080 $1,113,000
Management is considering the following independent alternatives for 2025.
Break-even point
$
1. Increase selling price
548,020
159,000
$2,369,100 $1,272,000 $1,097,100
Variable
Increase unit selling price 25% with no change in costs and expenses.
Change the compensation of salespersons from fixed annual salaries totaling $212,000 to total salaries of $42,400 plus a 5%
commission on net sales.
3. Purchase machinery
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 0 decimal places, e.g. 2,510.)
97,520
$
Change compensation $
61,480
Fixed
(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, e.g. 2,510.)
$
$549,080
Which course of action do you recommend?
450,500
97,520
Break-even point
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