Current Attempt In Progress Sheridan Inc Had A Bad Year In 2019 For The First Time In Its History It Operated At A Lo 1 (48.51 KiB) Viewed 9 times
Current Attempt In Progress Sheridan Inc Had A Bad Year In 2019 For The First Time In Its History It Operated At A Lo 2 (34.26 KiB) Viewed 9 times
Current Attempt in Progress Sheridan Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,975,000; total costs and expenses $1,997,300; and net loss $22,300. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2 3. Total $1,345,250 506,050 (2) Commit 146,000 Variable Fixed $840,500 $504,750 91,000 56,000 $1,997,300 $987,500 Management is considering the following independent alternatives for 2020. 415,050 90,000 $1,009,800 Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $199,000 to total salaries of $42,985 plus a 5% commission on net sales. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.
(a) Compute the break-even point in dollars for 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) Break-even point (b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to O decimal places, e.g. 2,510.) 1. 2 Increase selling price Break-even point $ Change compensation $ 3. Purchase machinery $ eTextbook and Media Which course of action do you recommend?
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