Reference no: EM13590159

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 79,700 units of product: Net sales $1,578,060; total costs and expenses $1,744,100; and net loss $166,040. Costs and expenses consisted of the following.

		Total		Variable		Fixed
Cost of goods sold		$1,201,300		$780,100		$421,200
Selling expenses		423,300		74,000		349,300
Administrative expenses		119,500		45,500		74,000
		$1,744,100		$899,600		$844,500

Management is considering the following independent alternatives for 2013.

1.		Increase unit selling price 24% with no change in costs and expenses.
2.		Change the compensation of salespersons from fixed annual salaries totaling $197,000 to total salaries of $37,600 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.

(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.

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