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FINC 577 Chapter 5 Notes Outline

# For the first time in its history it operated at a

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Unformatted text preview: 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. Chapter 5-54 Example Example 7 Management is considering the following independent alternatives for 2012. 1. Increase unit selling price 20% with no change in costs, expenses, and sales volume. volume. 2. Change the compensation of salespersons from fixed annual salaries totaling \$150,000 to total salaries of \$60,000 plus 150, 60, a 5% commission on net sales. sales. Instructions (a) Compute the break-even point in dollars for 2011. (b) Compute the break-even point in dollars under each of the breakalternative courses of action. (Round all ratios to nearest action. full percent.) Which course of action do you recommend? percent. Chapter 5-55 Example 7 (a) Compute the break-even point in dollars for 2011. break- Chapter 5-56 Example Example 7 (b) Compute the break-even point in...
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