Compute the break-even point in dollars under each of the

Reference no: EM13481616

Gorham Manufacturing's sales slumped badly in2010. For the first time in its history, it operated at a loss. Thecompany's income statement showed the following results fromselling 618,000 units of product: Net sales $2,472,000; total costsand expenses $2,616,200; and net loss $144,200. Costs and expensesconsisted of the amounts shown below.

Total		Variable		Fixed
Cost of goods sold	$2,163,000	$1,483,200	$679,800
Selling expenses	247,200	74,160	173,040
Administrative expenses	206,000	49,440	156,560
$2,616,200	$1,606,800	$1,009,400

Management is considering the following independent alternativesfor 2011.

Increase unit selling price 20% with no change in costs,expenses, and sales volume.
Change the compensation of salespersons from fixed annualsalaries totaling $216,300 to total salaries of $61,800 plus a 5%commission on net sales.

Compute the break-even point in dollars for2010.

Compute the break-even point in dollars under each of the alternative courses of action. (Round unit price to 2 decimal places, e.g.3.20, all ratios to 3 decimal places, e.g. 0.450 and final answersto 0 decimal places, e.g. 2,250,100.)

Reference no: EM13481616

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