esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. $2,038,400 Total Management is considering the following independent alternatives for 2022. 672,100 $2,905,500 3. Purchase machinery ! 195,000 1 Increase selling price $ F1 2. Change compensation $ Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 plus a 5% commission on net sales. 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 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) € 2 Variable $1,365,000 (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) 119,600 $ 75,400 $1,560,000 $1,345,500 F2 3363750 Fixed $673,400 552,500 Break-even point #3 119,600 662500 80 F3 4 F4 67 50 % 5 F5 6 F6 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F
esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. $2,038,400 Total Management is considering the following independent alternatives for 2022. 672,100 $2,905,500 3. Purchase machinery ! 195,000 1 Increase selling price $ F1 2. Change compensation $ Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 plus a 5% commission on net sales. 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 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) € 2 Variable $1,365,000 (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) 119,600 $ 75,400 $1,560,000 $1,345,500 F2 3363750 Fixed $673,400 552,500 Break-even point #3 119,600 662500 80 F3 4 F4 67 50 % 5 F5 6 F6 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:esc
Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income
statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and
expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following.
Cost of goods sold
Selling expenses
Administrative expenses
1.
2.
3.
Break-even point $
1.
2.
$2,038,400
Total
672,100
195,000
$2,905,500
Management is considering the following independent alternatives for 2022.
3. Purchase machinery
1
F1
Increase selling price $
Change compensation $
72
Variable
$1,365,000
Increase unit selling price 25% with no change in costs and expenses.
Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of
$52,000 plus a 5% commission on net sales.
(a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal
places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.)
119,600
4
Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of
goods sold to 50:50.
75,400
$
(b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round
contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g.
2,510.)
F2
$1,560,000 $1,345,500
$673,400
3363750
Fixed
Break-even point
552,500
#3
119,600
662500
80
F3
$
4
a
F4
%
175
F5
< 6
F6
7
7
78
79
8C
81
82
83
84
85
86
87
88
89
90
91
92
93
94
F
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