Reference no: EM132842985
Problem - Oriole Manufacturing's sales slumped badly in 2022. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 52,800 units of product: net sales $1,584,000; total costs and expenses $1,768,800; and net loss $184,800. Costs and expenses consisted of the amounts shown below:
|
|
Total
|
Variable
|
Fixed
|
|
Cost of goods sold
|
$1,188,000
|
$818,400
|
$369,600
|
|
Selling expenses
|
422,400
|
110,000
|
312,400
|
|
Administrative expenses
|
158,400
|
101,200
|
57,200
|
|
|
$1,768,800
|
$1,029,600
|
$739,200
|
Management is considering the following independent alternatives for 2023:
1. Increase the unit selling price by 30% with no change in costs, expenses, or sales volume.
2. Change the compensation of salespersons from fixed annual salaries totalling $176,000 to total salaries of $17,600 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.
Required - Compute the break-even point in dollars for 2022.