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esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. $2,038,400 Total Management is considering the following independent alternatives for 2022. 672,100 $2,905,500 3. Purchase machinery ! 195,000 1 Increase selling price $ F1 2. Change compensation $ Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 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. (a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) € 2 Variable $1,365,000 (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) 119,600 $ 75,400 $1,560,000 $1,345,500 F2 3363750 Fixed $673,400 552,500 Break-even point #3 119,600 662500 80 F3 4 F4 67 50 % 5 F5 6 F6 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F

esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. $2,038,400 Total Management is considering the following independent alternatives for 2022. 672,100 $2,905,500 3. Purchase machinery ! 195,000 1 Increase selling price $ F1 2. Change compensation $ Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 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. (a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) € 2 Variable $1,365,000 (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) 119,600 $ 75,400 $1,560,000 $1,345,500 F2 3363750 Fixed $673,400 552,500 Break-even point #3 119,600 662500 80 F3 4 F4 67 50 % 5 F5 6 F6 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. 2. $2,038,400 Total 672,100 195,000 $2,905,500 Management is considering the following independent alternatives for 2022. 3. Purchase machinery 1 F1 Increase selling price $ Change compensation $ 72 Variable $1,365,000 Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 plus a 5% commission on net sales. (a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) 119,600 4 Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. 75,400 $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) F2 $1,560,000 $1,345,500 $673,400 3363750 Fixed Break-even point 552,500 #3 119,600 662500 80 F3 $ 4 a F4 % 175 F5 < 6 F6 7 7 78 79 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F
Transcribed Image Text:esc Wildhorse Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 104,000 units of product: net sales $2,600,000; total costs and expenses $2,905,500; and net loss $305,500. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 1. 2. 3. Break-even point $ 1. 2. $2,038,400 Total 672,100 195,000 $2,905,500 Management is considering the following independent alternatives for 2022. 3. Purchase machinery 1 F1 Increase selling price $ Change compensation $ 72 Variable $1,365,000 Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $260,000 to total salaries of $52,000 plus a 5% commission on net sales. (a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) 119,600 4 Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. 75,400 $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) F2 $1,560,000 $1,345,500 $673,400 3363750 Fixed Break-even point 552,500 #3 119,600 662500 80 F3 $ 4 a F4 % 175 F5 < 6 F6 7 7 78 79 8C 81 82 83 84 85 86 87 88 89 90 91 92 93 94 F
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