Change the compensation of salespersons from fixed annual

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Reference no: EM13567093

Denny Manufacturing had a bad year in 2012. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 79,100 units of product: Net sales $1,574,090; total costs and expenses $1,758,400; and net loss $184,310. Costs and expenses consisted of the following.

	Total	Variable	Fixed
Cost of goods sold	$1,203,000	$781,600	$421,400
Selling expenses	422,400	79,100	343,300
Administrative expenses	133,000	53,200	79,800
	$1,758,400	$913,900	$844,500

1.Change the compensation of salespersons from fixed annual salaries totaling $196,600 to total salaries of $42,800 plus a 5% commission on net sales.

2.Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50.

3.Compute the break-even point in dollars under each of the alternative courses of action.

Reference no: EM13567093

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