What is break-even point in sales dollar under alternative a

Assignment Help Cost Accounting

Reference no: EM13903330

Alternatives to reduce break-even sales. Wolf Broadcasting operated at the break-even point of $2,250,000 during Year 1 while incurring fixed costs of $1,000,000. Management is considering two alternatives to reduce the break-even level. Alternative A trims fixed costs by $200,000 annually with no change in variable cost per unit; doing so, however, will reduce the quality of the product and result in a 10 percent decrease in selling price, but no change in the number of units sold. Alternative B substitutes automated equipment for certain operations now performed manually. Alternative B will result in an annual increase of $300,000 in fixed costs but a 5 percent decrease in variable costs per barrel produced, with no change in product quality, selling price, or sales volume.

a. What was the total contribution margin (contribution margin per unit times number of units sold) during Year 1?

b. What is the break-even point in sales dollars under alternative A?

c. What is the break-even point in sales dollars under alternative B?

d. What should the company do?

Reference no: EM13903330

Questions Cloud

Compute the total fixed costs and variable cost per unit : Can you compute the total fixed costs and variable cost per unit during Year 9? If so, do so. If not, illustrate why with a graph and discuss any important assumptions of the cost-volume-profit model that this application violates.

Calculate effect on traffic using stating any assumptions : Explain why the demand for the bridge is likely to be price-elastic.

What is the current status of the merged company : Did the mergers work or fail? How do you know this? What is the current status of the merged company? As a Human Resource Manager, what do you think worked well for the merger? What do you feel are some areas that can be improved for future changes w..

Explain how the costs and benefits of the import quotas : Explain how different theories presented in this case study are supported and how they can be tested in general terms. Explain why the results of the New York Times poll reported above are meaningless.

What is break-even point in sales dollar under alternative a : What is the break-even point in sales dollars under alternative A? What is the break-even point in sales dollars under alternative B? What should the company do?

Compute the contribution margin per unit for last year : Compute the contribution margin per unit for last year for each of the two production levels. Compute the break-even points in units for last year for each of the two production levels.

Awareness of cultural differences and other problems : As the medical assistant begins an encounter with a patient, awareness of cultural differences and other problems that may inhibit communication is important. Any number of situations may arise that the medical assistant must be prepared to addres..

How corporate social responsibility is moving from optional : Think about what the author is discussing in this article and apply it to the Middle East region and Saudi Arabia, specifically. Do you agree that corporations should play a prominent role in pursuing economic and social justice in the world, or i..

Why do you think this is the case : Transatlantic air travel in business class has an estimated elasticity of demand of 0.40 less than transatlantic air travel in economy class, with an estimated price elasticity of 0.62. Why do you think this is the case?

User Account

All Pages