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%
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!
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
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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