Doak International sells wagons. All wagons have the same unit selling price and variable costs. The following information is given for Doak International. Unit Variable Cost per Wagon Selling Price 960.00 Cost of Wagon 532.00 Sales Commissions 5% of Sells Price Annual Costs Rent 72,360 Salaries and Wages 350,000 Marketing 49,300 Other Annual Costs 87,700 (a) What is the breakeven point in units sold? (b) If Doak International sells 1,700 wagons will there be operating income or loss? What is the operating income or loss? (c) Doak International is thinking about changing its Sales Commissions. What is the breakeven point in units for each of the two options below? Option1: Instead of the current structure, Doak International would change Sales commissions to $60 per wagon sold and decrease the salaries and wages to $250,640. What is the new breakeven point in units? Option 2: instead of the current structure doak would change sales commissions to $30 a wagon sold and decrease the salaries and wages to $447,340. D) which of the three options would you recommend doak choose and why?
Doak International sells wagons. All wagons have the same unit selling price and variable costs. The following information is given for Doak International. Unit Variable Cost per Wagon Selling Price 960.00 Cost of Wagon 532.00 Sales Commissions 5% of Sells Price Annual Costs Rent 72,360 Salaries and Wages 350,000 Marketing 49,300 Other Annual Costs 87,700 (a) What is the breakeven point in units sold? (b) If Doak International sells 1,700 wagons will there be operating income or loss? What is the operating income or loss? (c) Doak International is thinking about changing its Sales Commissions. What is the breakeven point in units for each of the two options below? Option1: Instead of the current structure, Doak International would change Sales commissions to $60 per wagon sold and decrease the salaries and wages to $250,640. What is the new breakeven point in units? Option 2: instead of the current structure doak would change sales commissions to $30 a wagon sold and decrease the salaries and wages to $447,340. D) which of the three options would you recommend doak choose and why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Doak International sells wagons. All wagons have the same unit selling price and variable costs. The following information is
given for Doak International. Unit Variable Cost per Wagon Selling Price 960.00 Cost of Wagon 532.00 Sales Commissions 5%
of Sells Price Annual Costs Rent 72,360 Salaries and Wages 350,000 Marketing 49,300 Other Annual Costs 87,700 (a) What is
the breakeven point in units sold? (b) If Doak International sells 1,700 wagons will there be operating income or loss? What is
the operating income or loss? (c) Doak International is thinking about changing its Sales Commissions. What is the breakeven
point in units for each of the two options below? Option1: Instead of the current structure, Doak International would change
Sales commissions to $60 per wagon sold and decrease the salaries and wages to $250,640. What is the new breakeven
point in units? Option 2: instead of the current structure doak would change sales commissions to $30 a wagon sold and
decrease the salaries and wages to $447,340. D) which of the three options would you recommend doak choose and why?
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