Homework Help is Here – Start Your Trial Now!
Business
Accounting
Pharoah 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 54,000 units of product: net sales $1,620,000; total costs and expenses $1,809,000; and net loss $189.000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,215,000 432,000 162,000 $1,809,000 Variable $837,000 112,500 103,500 $1,053,000 Fixed $378,000 319,500 58,500 $756,000 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 $180,000 to total salaries of $18,000 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.

Pharoah 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 54,000 units of product: net sales $1,620,000; total costs and expenses $1,809,000; and net loss $189.000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,215,000 432,000 162,000 $1,809,000 Variable $837,000 112,500 103,500 $1,053,000 Fixed $378,000 319,500 58,500 $756,000 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 $180,000 to total salaries of $18,000 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Please do not give solution in image format thanku 

Pharoah 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 54,000 units of product: net sales $1,620,000; total costs and expenses $1,809,000; and net loss $189,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,215,000 432,000 162,000 $1,809,000 Variable Fixed $837,000 $378.000 112,500 319,500 103,500 58,500 $1,053,000 $756,000 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 $180,000 to total salaries of $18,000 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.
Transcribed Image Text:Pharoah 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 54,000 units of product: net sales $1,620,000; total costs and expenses $1,809,000; and net loss $189,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,215,000 432,000 162,000 $1,809,000 Variable Fixed $837,000 $378.000 112,500 319,500 103,500 58,500 $1,053,000 $756,000 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 $180,000 to total salaries of $18,000 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.
(b) 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 Save for Later s
Transcribed Image Text:(b) 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 Save for Later s
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Income Taxes
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.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS