Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed thefollowing results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss$280,200. Costs and expenses consisted of the following.TotalVariableFixedCost of goods sold$1,106,000$598,000$508,000Selling expenses522,20095,000427,200Administrative expenses152,00057,00095,000$1,780,200$750,000 $1,030,200Management is considering the following independent alternatives for 2020.1.Increase unit selling price 25% with no change in costs and expenses.2.3.Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,010 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 to50:50.(a) Compute the break-even point in dollars for 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0decimal places, e.g. 2,510.)Break-even point(b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to3 decimal places e.g. 0.251 and final answers to O decimal places, eg. 2,510.)Break-even point1. Increase selling price$2.Change compensation$3.Purchase machinery$Which course of action do you recommend?

Name: Midlands Inc. had a bad year in 2019. For the first time in its histo
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed thefollowing results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,20

The CVP analysis is done by the companies to estimate the units that will bring the desired profit…

Business

Accounting

Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 Administrative expenses 152,000 95,000 57,000 427,200 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1 Increase unit selling price 25% with no change in costs and expenses.

Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 Administrative expenses 152,000 95,000 57,000 427,200 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1 Increase unit selling price 25% with no change in costs and expenses.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Swifty Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The…

A: Lets understand the basics. Break even point is a point at which no profit no loss condition arise.…

Q: Please provide Answer Fast

A: Step 1: Introduction to Gross Profit:For a manufacturing firm, the gross profit is determined by…

Q: JBC Ltd. sells goods on a gross profit of 25%. Depreciation of TZS 60,000 is considered as a part of…

A: Working capital refers to the funds that a company has available for its daily operations. It…

Q: Midlands Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The…

A: An income statement, also known as a profit and loss statement or P&L statement, is a financial…

Q: Cullumber Manufacturing's sales slumped badly in 2022. For the first time in its history, it…

A: Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

Q: Sheridan Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The…

A: Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

Q: Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss.…

A: Break-even point- The break-even point is the point at which total cost and total revenue are the…

Q: I need help getting the Cost of Good Sold. 107,000 is not correct.

A: Step 1: Calculate Applied Overhead for each JobAplplied OverheadDirect Labour Cost * Pre Determined…

Q: One of ABC product line has been unprofitable for the past 18 months. The latest monthly income…

A: Current the product line is incurring a loss of $ 2,600. Income statement assuming the product line…

Q: ABC Manufacturing produces metal lampposts. The company's income statements for the last two years…

A: Under the high-low method, a difference of high and low points is taken to calculate the variable…

Q: Ivanhoe Company manufactures cappuccino makers. For the first eight months of 2022, the company…

A: Given,Special order for = 43200 machinesSale price for each machine = $ 135Variable cost of goods…

Q: Direct manufacturing labor $228,000 Variable manufacturing overhead 120,000 Direct materials 180,000…

A: Ending finished goods inventory under variable costing includes direct labor, materials and variable…

Q: Oriole Inc. had a bad year in 2026. For the first time in its history, it operated at a loss. The…

A: Step 1:I. encountered extraordinary difficulties and suffered its first financial loss since its…

Q: Sunland Inc. had a bad year in 2024. For the first time in its history, it operated at a loss. The…

A: Break-even point (BEP):The break-even point refers to the point at which the sales revenue covers…

Q: According to the producer price index database maintained by the Bureau of Labor Statistics, the…

A: Times interest earned ratio is an accounting metric which measures the number of times operating…

Q: How much is Cost of Goods Manufactured and Cost of Goods Sold?

A: Cost of goods sold is the cost incurred by the company on the goods sold. It is reported in the…

Q: Data table Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs…

A: Customer-level operating income=Gross margin-Customer level operating costs

Q: Flamengo Co is a sporting goods manufacturing. Last year, report the following Income Statement:…

A: Cost of goods sold exhibits direct cost incurred by company for producing goods and services.

Q: According to the producer price index database maintained by the Bureau of Labor Statistics, the…

A: Answer 1: Gross profit percentage=Gross ProfitSales Revenue×100 Gross profit…

Q: Dousmann Corp.’s sales slumped badly in 2014. For the fi rst time in its history, it operated at a…

A: Break-even point in dollars= Total Fixed cost/ Contribution Margin ratio Contribution margin ratio=…

Q: Flamengo Co is a sporting goods manufacturing. Last year, report the following Income Statement:…

A: Turnover refers to the total amount of sales build up by a business in a particular period of time.…

Q: Raker Inc., manufactures product A. For the year ended Dec 31, 2019, the contribution margin…

A: CVP or Cost Volume Profit analysis is a technique of accounting used for identification of the…

Q: Darby Company, operating at full capacity, sold 165,500 units at a price of $87 per unit during the…

A: Solution :- 1)Calculation of fixed and variable costs as follows under:- First we need to allocate…

Q: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable…

A: ‘’Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss.…

A: Break-even point (BEP) can be referred to as that point of sales where the entity is able to recover…

Q: On the basis of the following data, the general manager of Hawkeye Shoes Inc. decided to discontinue…

A: Differential analysis: Differential analysis refers to the analysis of differential revenue that…

Q: Chandler Company sells its product for $108 per unit. Variable manufacturing costs per unit are $49,…

A: Under absorption costing, total cost incurred for manufacturing the product whether it is fixed cost…

Q: Omega Company has sales of $350,000 and cost of goods sold of $225,000. The cost of goods sold is a…

A: Income statement: Income statement is the financial statement which shows the financial performance…

Q: Tech Company is a medium-sized consumer electronics retailer. The company reported $155,000,000 in…

A: Revenue is the amount received for selling all the goods. The cost of goods sold is the total cost…

Q: Pharoah Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The…

A: Break even refers to the situation when there is no loss or no profit or at this point the total…

Q: Prairie Corporation has sales of $7,000,000 in its first year of operation. During this first year…

A: Income Statement is that which shown the business performance. It is prepare in every company every…

Q: P5-3A Dousmann Corp.'s sales slumped badly in 2014. operated at a loss. The company's income…

A: Break even point means a point where firm is neither earning profit nor incurring any loss. For…

Q: The events and transactions of Dever Corporation for the year ending December 31, 2014, resulted in…

A: An income statement, also known as a profit and loss statement, is a financial statement that shows…

Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

Topic Video

Question

Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the
following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss
$280,200. Costs and expenses consisted of the following.
Total
Variable
Fixed
Cost of goods sold
$1,106,000
$598,000
$508,000
Selling expenses
522,200
95,000
427,200
Administrative expenses
152,000
57,000
95,000
$1,780,200
$750,000 $1,030,200
Management is considering the following independent alternatives for 2020.
1.
Increase unit selling price 25% with no change in costs and expenses.
2.
3.
Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,010 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 dollars for 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0
decimal places, e.g. 2,510.)
Break-even point
(b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to
3 decimal places e.g. 0.251 and final answers to O decimal places, eg. 2,510.)
Break-even point
1. Increase selling price
$
2.
Change compensation
$
3.
Purchase machinery
$
Which course of action do you recommend?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Analysis

VIEW

Step 2: (a) Calculation of break-even point in dollars for 2019:

VIEW

Step 3: (b1)- Calculation of break-even point in dollar based on increase selling price:

VIEW

Step 4: (b2)- Calculation of break-even point in dollar based on change compensation:

VIEW

Step 5: (b3)- Calculation of break-even point in dollar based on purchase of machinery:

VIEW

Step 6: Recommendation of course of action between b1, b2 and b3:

VIEW

Solution

VIEW

Step by step

Solved in 7 steps with 17 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Alder Inc. produced and sold 2,000 units of one product during the year. The company's net income was $40,000, its fixed cost per unit was $60, and the variable cost ratio was .25. What must the company's sales revenue be if it wants to earn $50,000 next year? $192,000 O $208,000 $226,667 $211,111 None of the above
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 80,000 units of product: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,568,000 $1,050,000 $518,000 Selling expenses 517,000 92,000 425,000 Administrative expenses 150,000 58,000 92,000 $2,235,000 $1,200,000 $1,035,000 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 25% with no change in costs and expenses. 2. 3. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 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 dollars for 2019.…
Please help me to solve this question
A company had $270,000 in sales; $150,000 in goods available for sale; ending finished goods inventory of $30,000, and selling and administrative expenses of $65,000. Which of the following statements is true？ 1. Net income was 28% of sales 2. The costs of goods sold was $137,000 3. The beginning finished goods inventory is not determinable. 4. The gross income was $93,000
Sisyphus Inc. records total sales of $657,500 in the current period, with a cost of goods sold of $389,000 . Sisyphus expects 4% of sales to be returned. How much in net sales will Sisyphus recognize for the current period? Group of answer choices $373,400 $268,500 $631,200 $657,500 $257,760 The Sisyphus Inc’s (SSY) Company’s annual statement of cash flows reported the following (in millions): Net cash from financing activities $63,864 Net cash from investing activities -62,512 Cash at the beginning of the year 13,152 Cash at the end of the year 18,948 What did SSY report for “Net cash from operating activities” during the year? Group of answer choices $71,220 million cash inflow None of the above $4,444 million cash outflow $4,444 million cash inflow $71,220 million cash outflow
ewer D) Portis, Inc. reported sales of $8,000,000 for the month and incurred variable totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) How many units would the company have to sell to achieve a desired profit of $1,200,000? expenses 88,000 A) 100,000 B) 106,668 C) 150,000 D) Inn renorted sales of $8.000,000 for the month and incurred variable expenses nu hor no
ABC Manufacturing produces metal lampposts. The company's income statements for the last two years are given below. The company has no beginning or ending inventories. Last Year This YearUnits sold. 60,000 85,000Sales. 1,440,000. 2,040,000Less cost of goods sold. 785,000 1,060,000 Gross margin 655,000 980,000Less operating expenses. 237,000 312,000Net income 418,000. 668,000 Determine the company's total fixed costs. a) 182,000b) 125,000c) 205,700d) 162,500
Whipple Company has sales revenue of $585,000. Cost of goods sold before adjustment is $335,000. The company uses machine hours to allocate manufacturing overhead and estimated 10,450 machine hours would be used during the year. For the year, manufacturing overhead was under-allocated by $13,400. The company's actual manufacturing overhead is $91,000. What is the actual gross profit? Select one: a. $250,000 b. $159,000 c. $236,600 d. $104,400 e. $263,400
Flamengo Co is a sporting goods manufacturing. Last year, report the following Income Statement: Sales $620,000 Cost of goods sold 316,000 Gross margin $304,000 Selling and administrative expense 246,000 Operating income $ 58,000 Less: Income taxes (at 40%) 34,000 Net income $ 24,000 At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $363,000. Flamengo Co. requires a minimum rate of return of 15%. Total capital employed equals $350,000 and the actual cost of capital is 6%, Calculate the Return on Investment. (Carry computations out to two decimal places.)
P19-3B Olgivie Company had a bad year in 2013. For the first time in its history, it oper- ated at a loss. The company's income statement showed the following results from selling 60,000 units of product: sales $1,800,000; total costs and expenses $2,010,000; and net loss $210,000. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $1,350,000 480,000 180,000 $2,010,000 $930,000 125,000 115,000 $420,000 355,000 65,000 $840,000 $1,170,000 Management is considering the following independent alternatives for 2014. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $20,000 plus a 5% 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. Instructions (a) Compute…