Tanck manufacturings sales slumped badly in 2011 for the

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Tanck Manufacturing's sales slumped badly 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 600,000 units of product: Net sales $2,400,000; total costs and expenses $2,540,000; and net loss $140,000. Costs and expenses consisted of the amounts shown below.

Total Variable Fixed
Cost of goods sold $2,100,000 $1,440,000 $660,000
Selling expenses 240,000 72,000 168,000

Administrative expenses
200,000

48,000
152,000
$2,540,000
$1,560,000
$980,000

Management is considering the following independent alternatives for 2012.Increase unit selling price 20% with no change in costs, expenses, and sales volume.Change the compensation of salespersons from fixed annual salaries totaling $150,000 to total salaries of $60,000 plus a 5% commission on net sales.

Reference no: EM13600337

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