Midlands Inc. had a bad year in 2016. For the first time in its history, it operated

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Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 80,000 units of product: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following.

Midlands Inc. had a bad year in 2016. For the

Management is considering the following independent alternatives for 2017.
1. Increase unit selling price 25% with no change in costs and expenses.
2. Change the compensation of sales persons form fixed annual salaries totaling $200,000 to total salaries of $40,000 plus a 5% 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.
Instruction
(a) Compute the break - even point in dollars for 2017.
(b) Compute the break - even point in dollars under each of the alternative courses of action. (Round to the nearest dollar.) Which course of action do you recommend?

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Related Book For  answer-question

Managerial Accounting Tools for Business Decision Making

ISBN: 978-1119036432

7th edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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