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Wildhorse 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 78.000 units of product: net sales $2,340,000; total costs and expenses $2,613,000; and net loss $273,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,755,000 624,000 234,000 Variable $1,209,000 162,500 149.500 $2,613,000 $1,521.000 Fixed $546,000 461.500 84,500 $1,092,000 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $260,000 to total salaries of $26.000 plus a 10 % 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.

Wildhorse 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 78.000 units of product: net sales $2,340,000; total costs and expenses $2,613,000; and net loss $273,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,755,000 624,000 234,000 Variable $1,209,000 162,500 149.500 $2,613,000 $1,521.000 Fixed $546,000 461.500 84,500 $1,092,000 Management is considering the following independent alternatives for 2023: 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $260,000 to total salaries of $26.000 plus a 10 % 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
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Wildhorse 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 78.000 units of product: net sales $2,340,000; total costs and expenses $2,613,000; and net loss $273,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,755,000 624,000 234,000 $2,613,000 Variable $1,209,000 162,500 149.500 $1,521.000 e Textbook and Media Management is considering the following independent alternatives for 2023: Fixed $546,000 461.500 84,500 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $260,000 to total salaries of $26.000 plus a 10% commission on net sales. $1,092,000 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. Break-even point if unit selling price increases by 30% 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 0 decimal places, e.g. 5,275.) Break-even point if there is a change in compensation Break-even point if there is a purchase of new high-tech factory machinery $ $ $ 240000
Transcribed Image Text:Wildhorse 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 78.000 units of product: net sales $2,340,000; total costs and expenses $2,613,000; and net loss $273,000. Costs and expenses consisted of the amounts shown below: Cost of goods sold Selling expenses Administrative expenses Total $1,755,000 624,000 234,000 $2,613,000 Variable $1,209,000 162,500 149.500 $1,521.000 e Textbook and Media Management is considering the following independent alternatives for 2023: Fixed $546,000 461.500 84,500 1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume. 2. Change the compensation of salespersons from fixed annual salaries totalling $260,000 to total salaries of $26.000 plus a 10% commission on net sales. $1,092,000 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. Break-even point if unit selling price increases by 30% 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 0 decimal places, e.g. 5,275.) Break-even point if there is a change in compensation Break-even point if there is a purchase of new high-tech factory machinery $ $ $ 240000
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