P19 -...

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P19-1A   Cruz Manufacturing had a bad year in 2010. 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 Cost of goods sold $1,200,000 $780,000 Selling expenses 420,000 75,000 Administrative expenses 120,000 45,000 $1,740,000 $900,000 Management is considering the following independent alternatives for 2011.  1.   Increase unit selling price 25% with no change in costs and 2.   Change the compensation of salespersons from fixed annua $200,000 to total salaries of $40,000 plus a 5% commission 3.   Purchase new high-tech factory machinery that will change variable and fixed cost of goods sold to 50:50. Hint:  Compute break-even point under alternative courses of action. (SO 1 , 2 ) Instructions (a)   Compute the break-even point in dollars for 2010. (b)   Compute the break-even point in dollars under each of the alte (Round to the nearest dollar.) Which course of action do you r $1,754,839
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calculating BE Quantity and then BE in dollars BE Q formula=FC/(P (unit) - VC (unit))
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This note was uploaded on 11/06/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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P19 -...

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