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Cullumber Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 63,600 units of product: net sales $1,908,000; total costs and expenses $2,130,600; and net loss $222,600. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Fixed $445,200 376,300 68,900 $2,130,600 $1,240,200 $890,400 Total $1,431,000 508,800 190,800 Variable $985,800 132,500 121,900 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 25% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $212,000 to total salaries of $21,200 plus a 10% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.

Cullumber Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 63,600 units of product: net sales $1,908,000; total costs and expenses $2,130,600; and net loss $222,600. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Fixed $445,200 376,300 68,900 $2,130,600 $1,240,200 $890,400 Total $1,431,000 508,800 190,800 Variable $985,800 132,500 121,900 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 25% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $212,000 to total salaries of $21,200 plus a 10% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(b) Your answer is partially correct. Calculate the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 0 decimal places, e.g. 15% and final answers to O decimal places, e.g. 5,275.) Break-even point if unit selling price increases by 25% Break-even point if there is a change in compensation Break-even point if there is a purchase of new high-tech factory machinery A $ $ 1855000 2798400 2421136.36
Transcribed Image Text:(b) Your answer is partially correct. Calculate the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 0 decimal places, e.g. 15% and final answers to O decimal places, e.g. 5,275.) Break-even point if unit selling price increases by 25% Break-even point if there is a change in compensation Break-even point if there is a purchase of new high-tech factory machinery A $ $ 1855000 2798400 2421136.36
Cullumber Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 63,600 units of product: net sales $1,908,000; total costs and expenses $2,130,600; and net loss $222,600. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,431,000 508,800 190,800 Variable $985,800 132,500 121,900 Fixed $445,200 376,300 68,900 $2,130,600 $1,240,200 $890,400 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 25% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $212,000 to total salaries of $21,200 plus a 10% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.
Transcribed Image Text:Cullumber Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 63,600 units of product: net sales $1,908,000; total costs and expenses $2,130,600; and net loss $222,600. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,431,000 508,800 190,800 Variable $985,800 132,500 121,900 Fixed $445,200 376,300 68,900 $2,130,600 $1,240,200 $890,400 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 25% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $212,000 to total salaries of $21,200 plus a 10% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.
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