Reference no: EM13604714

Giere Manufacturing had a bad year in 2011. For the first time in its history it operated at a loss. The company's income statement showed the following results from selling 80,000 units of product: Net sales $1,600,000; total costs and expenses $1,740,000; and net loss $140,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,200,000 $780,000 $420,000 Selling expenses 420,000 75,000 345,000 Administrative expenses 120,000 45,000 75,000 $1,740,000 $900,000 $840,000 Management is considering the following independent alternatives for 2012. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 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. Compute the break-even point in dollars for 2011. (Round answers to 0 decimal places, e.g. 125. For computational of unit costs and contribution margin ratios, round to 4 decimal places, e.g. 10.2520. Round all other computations to 0 decimal places, e.g. 125.) $ Compute the break-even point in dollars under each of the alternative courses of action. (Round answers to 0 decimal places, e.g. 125. For computational of unit costs and contribution margin ratios, round to 4 decimal places, e.g. 10.2520. Round all other computations to 0 decimal places, e.g. 125.)

1. Increase selling price $ 1527272.727

2. Change compensation $1754839

3. Purchase machinery $ Which alternative is the recommended course of action? 1