Sheridan Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,663,375, and net loss $85,875. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,189,115 $1,768,165 $420,950 Selling expenses 257,750 94,852 162,898 Administrative expenses 216,510 70,108 146,402 $2,663,375 $1,933,125 $730,250 Management is considering the following independent alternatives for 2021. 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 $154,650 to total salaries of $61,860 plus a 5% commission on sales.
Sheridan Corp's sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,663,375, and net loss $85,875. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,189,115 $1,768,165 $420,950 Selling expenses 257,750 94,852 162,898 Administrative expenses 216,510 70,108 146,402 $2,663,375 $1,933,125 $730,250 Management is considering the following independent alternatives for 2021. 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 $154,650 to total salaries of $61,860 plus a 5% commission on sales.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Corp's sales slumped badly in 202O. For the first time in its history, it operated at a loss. The company's income statement
showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,663,375, and net
loss $85,875. Costs and expenses consisted of the amounts shown below.
Total
Variable
Fixed
Cost of goods sold
$2,189,115
$1,768,165
$420,950
Selling expenses
257,750
94,852
162,898
Administrative expenses
216,510
70,108
146,402
$2,663,375
$1,933,125
$730,250
Management is considering the following independent alternatives for 2021.
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 $154,650 to total salaries of $61,860 plus a 5%
commission on sales.
Transcribed Image Text:Compute the break-even point in dollars for 2020.
Break-even point
$
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