Break even sales are the sales made to recover all the costs incurred by the company. It is the point at which the company neither makes profit, nor incurs loss. It is the point which every company targets to reach even in the restricted environment, so that they would not have to incur any cost from their pockets. 1) As to how the error of considering personnel’s salaries and fixed selling cost could impact break-even sales and operating income under the proposed sales commission plan? Could this cause the president to reject the sales commission proposal? 2) Considering ethical responsibilities, is there a difference between: a) initially making an error and (b) subsequently failing to inform the controller? 3) Suppose you tell Matthew Barnhill of the error in your analysis. Why might the consequences not as bad as you fear? Should Barnhill take any responsibility for your error? What could Barnhill have done differently? 4) After considering all factors, should you inform Barnhill or simply keep quiet?

Question

Want to see the full answer?

Answer 1

Question

Chapter 21, Problem 21.1EI

To determine

Concept Introduction:

Break even sales are the sales made to recover all the costs incurred by the company. It is the point at which the company neither makes profit, nor incurs loss. It is the point which every company targets to reach even in the restricted environment, so that they would not have to incur any cost from their pockets.

1) As to how the error of considering personnel’s salaries and fixed selling cost could impact break-even sales and operating income under the proposed sales commission plan? Could this cause the president to reject the sales commission proposal?

2) Considering ethical responsibilities, is there a difference between: a) initially making an error and (b) subsequently failing to inform the controller?

3) Suppose you tell Matthew Barnhill of the error in your analysis. Why might the consequences not as bad as you fear? Should Barnhill take any responsibility for your error? What could Barnhill have done differently?

4) After considering all factors, should you inform Barnhill or simply keep quiet?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The beginning inventory at Smith Co. and data on purchases and sales for a three-month period ending June 30 are... Date Transaction Numberof Units Per Unit Total Apr. 3 Inventory 48 $450 $21,600 8 Purchase 96 540 51,840 11 Sale 64 1,500 96,000 30 Sale 40 1,500 60,000 May 8 Purchase 80 600 48,000 10 Sale 48 1,500 72,000 19 Sale 24 1,500 36,000 28 Purchase 80 660 52,800 June 5 Sale 48 1,575 75,600 16 Sale 64 1,575 100,800 21 Purchase 144 720 103,680 28 Sale 72 1,575 113,400 Record inventory, purchases, cost of merchandise sold data in perpetual invetory record similar to the one illutrated in exhibit 3 using FIFO. Under FIFO if units at two different costs eneter the units with the lower unit cost first in the cost of goods sold unit cost column and in the inventory unit cost column.

Summit Manufacturing has a standard costing system. The following data are available for October: • • Actual quantity of direct materials purchased: 40,000 pounds Standard price of direct materials: $6 per pound Material price variance: $4,800 unfavorable Material quantity variance: $3,200 favorable What is the actual price per pound of direct materials purchased in October?

I want to correct answer general accounting question