Question
In: Accounting
George Corporation sales slumped badly in 2020. For the first time in its history, it operated...
George Corporation sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 555,500 units of product: sales $2,777,500, total costs and expenses $2,869,375, and net loss $91,875. Costs and expenses consisted of the amounts shown below.
Total Variable Fixed
Cost of goods sold $2,358,315 $1,905,365 $452,950
Selling expenses 277,750 102,212 175,538
Administrative expenses 233,310 75,548 157,762
$2,869,375 $2,083,125 $786,250
Management is considering the following independent alternatives
for 2021.
| 1. | Increase unit selling price 25% with no change in costs, expenses, and sales volume. | |
| 2. | Change the compensation of salespersons from fixed annual salaries totaling $166,650 to total salaries of $66,660 plus a 5% commission on sales. |
a) Compute the break-even point in dollars for 2020.
Break-even point $______
b) Compute the contribution margin under each of the alternative courses of action
contribution margin for alternative 1: ____%
contribution margin for alternative 2: ____%
c) Compute the break-even point in dollars under each of the alternative courses of action.
Break-even point for alternative 1: $______
Break-even point for alternative 2: $________
d) Which course of action do you recommend alternative 1 or alternative 2?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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$ 1,905,365
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Selling expenses
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Cost of goods sold
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Cost of goods sold
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Selling expenses
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93,012
159,738
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212,310
68,748
143,562
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and net loss $108,100. Costs and expenses consisted of the amounts
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Fixed
Cost of goods sold
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Selling expenses
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92,092
158,158
Administrative expenses
210,210
68,068
142,142
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Fixed
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105,892
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241,710
78,268
163,442
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Problem 22-3A Tanek Corp.’s sales slumped badly in 2017. For the first time in its history,...
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first time in its history, it operated at a loss. The company’s
income statement showed the following results from selling 550,500
units of product: sales $2,752,500, total costs and expenses
$2,862,600, and net loss $110,100. Costs and expenses consisted of
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A business operated at 100% of capacity during its first month, with the following results: Sales...
A business operated at 100% of capacity during its first month,
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Sales (112 units)
$560,000
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Direct materials
$70,000
Direct labor
17,500
Variable factory overhead
31,500
Fixed factory overhead
28,000
147,000
Operating expenses:
Variable operating expenses
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Fixed operating expenses
3,680
9,540
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A business operated at 100% of capacity during its first month, with the following results: Sales...
A business operated at 100% of capacity during its first month,
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$498,200
Production costs (132 units):
Direct materials
$67,065
Direct labor
17,123
Variable factory overhead
29,965
Fixed factory overhead
28,539
142,692
Operating expenses:
Variable operating expenses
$6,403
Fixed operating expenses
4,854
11,257
The amount of operating income that would be reported on the
absorption costing income statement is
a.$395,275
b.$400,129
c.$372,357
d.$498,068
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