Reference no: EM132105437

Question - 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 76,300 units of product: Net sales $1,510,740; total costs and expenses $1,737,000; and net loss $226,260. Costs and expenses consisted of the following.

	Total	Variable	Fixed
Cost of goods sold	$1,199,800	$778,500	$421,300
Selling expenses	425,100	79,900	345,200
Administrative expenses	112,100	45,100	67,000
	$1,737,000	$903,500	$833,500

Management is considering the following independent alternatives for 2013.

1. Increase unit selling price 26% with no change in costs and expenses.

2. Change the compensation of salespersons from fixed annual salaries totaling $196,800 to total salaries of $40,900 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.

(a) Compute the break-even point in dollars for 2012.

(b) Compute the break-even point in dollars under each of the alternative courses of action.