Reference no: EM132452750

Cost Volume Profit Problem

Query company's projected income statement shows the following results from selling 100,000 units of product. Net sales are $2,000,000 - total expenses are $1,760,000 - net income is $240,000.

The details of the expenses are as following:

                                   FIXED                                VARIABLE                         TOTAL
Cost of goods sold           $420,000.00                       $780,000.00                     $1,200,000.00
Selling expenses              $340,000.00                       $100,000.00                      $440,000.00
Administrative expenses    $60,000.00                         $60,000.00                       $120,000.00
Total Expenses                $820,000.00                        $940,000.00                    $1,760,000.00

Compute the break-even point in dollars and units for each of the independent alternatives:

1. Increase unit selling price by 20% with no change in variable or fixed costs.

2. Increase the sales volume by 20% but keep the price per unit the same.

3. Change the compensation of salespersons (selling expenses) to 10% commission of sales with no fixed cost.

• THIs PROJECT AND ALL CALCULATIONS MUST BE DONE USING A SPREADSHEET (i.e. Excel)