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

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Reference no: EM13566337

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 75,300 units of product: Net sales $1,445,760; total costs and expenses $1,741,800; and net loss $296,040. Costs and expenses consisted of the following.

	Total	Variable	Fixed
Cost of goods sold	$1,206,700	$781,900	$424,800
Selling expenses	423,900	79,400	344,500
Administrative expenses	111,200	50,900	60,300
	$1,741,800	$912,200	$829,600

Management is considering the following independent alternatives for 2013.

Increase unit selling price 28% with no change in costs and expenses.

Change the compensation of salespersons from fixed annual salaries totaling $203,000 to total salaries of $36,900 plus a 5% commission on net sales.

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. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

Break-even point

(b) Compute the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

		Break-even point
1.	Increase selling price	$
2.	Change compensation	$
3.	Purchase machinery	$

Reference no: EM13566337

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