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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F606d1fb0-e45b-4016-b225-8946a77e0ed9%2F2b8081d1-8c64-4405-95f5-530a5b286ed2%2Fm7oj05f_processed.jpeg&w=3840&q=75)
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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