Tanek Corp's sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 540,500 units of product: sales $2,702,500, total costs and expenses $2,803,440, and net loss $100,940. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses 1. 2 Total $2,306,180 270,250 227,010 Break-even point $ Variable $1,772,840 99,452 73,508 Management is considering the following independent alternatives for 2018. Fixed $2,803,440 $1,945,800 $857,640 Contribution margin for alternative 1 $533,340 170,798 Increase unit selling price 20% with no change in costs, expenses, and sales volume. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales. Contribution margin for alternative 2 153,502 (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, eg. 1,225.) 5850204 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to 0 decimal places, eg. 1,225.J 29 % %

Tanek Corp's sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 540,500 units of product: sales $2,702,500, total costs and expenses $2,803,440, and net loss $100,940. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses 1. 2 Total $2,306,180 270,250 227,010 Break-even point $ Variable $1,772,840 99,452 73,508 Management is considering the following independent alternatives for 2018. Fixed $2,803,440 $1,945,800 $857,640 Contribution margin for alternative 1 $533,340 170,798 Increase unit selling price 20% with no change in costs, expenses, and sales volume. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales. Contribution margin for alternative 2 153,502 (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, eg. 1,225.) 5850204 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to 0 decimal places, eg. 1,225.J 29 % %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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