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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 $2,802,600, and net loss $100,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,305,340 $1,772,840 $532,500 Selling expenses 270,250 99,452 170,798 Administrative expenses 227,010 73,508 153,502 $2,802,600 $1,945,800 $856,800 Management is considering the following independent alternatives for 2018. 1. 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%

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 $2,802,600, and net loss $100,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,305,340 $1,772,840 $532,500 Selling expenses 270,250 99,452 170,798 Administrative expenses 227,010 73,508 153,502 $2,802,600 $1,945,800 $856,800 Management is considering the following independent alternatives for 2018. 1. 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%

FINANCIAL ACCOUNTING
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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Also find the Break-even point for alternative 2. Thank you!
(a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, e.g. 1,225.) Break-even point $4 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to0 decimal places, eg. 1,225.) Contribution margin for alternative 1 Contribution margin for alternative 2 Compute the break-even point in dollars under each of the alternative courses of action. (Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answers to 0 decimal places, e.g. 1,225.) Break-even point for alternative 1
Transcribed Image Text:(a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, e.g. 1,225.) Break-even point $4 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to0 decimal places, eg. 1,225.) Contribution margin for alternative 1 Contribution margin for alternative 2 Compute the break-even point in dollars under each of the alternative courses of action. (Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answers to 0 decimal places, e.g. 1,225.) Break-even point for alternative 1
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 $2,802,600, and net loss $100,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,305,340 $1.772,840 $532,500 Selling expenses 270,250 99,452 170,798 Administrative expenses 227,010 73,508 153,502 $2,802,600 $1,945,800 $856.800 Management is considering the following independent alternatives for 2018. 1. Increase unit selling price 20% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales.
Transcribed Image Text: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 $2,802,600, and net loss $100,100. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,305,340 $1.772,840 $532,500 Selling expenses 270,250 99,452 170,798 Administrative expenses 227,010 73,508 153,502 $2,802,600 $1,945,800 $856.800 Management is considering the following independent alternatives for 2018. 1. Increase unit selling price 20% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales.
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