View the step-by-step solution to:

Problem 19-1A (Part Level Submission) Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss.

Problem 19-1A (Part Level Submission) Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 75,200 units of product: Net sales $1,466,400; total costs and expenses $1,722,900; and net loss $256,500. Costs and expenses consisted of the following.

Total Variable Fixed
Cost of goods sold $1,197,100 $775,900 $421,200
Selling expenses 413,500 71,700 341,800
Administrative expenses 112,300 48,600 63,700
$1,722,900 $896,200 $826,700

Management is considering the following independent alternatives for 2014.

1. Increase unit selling price 26% with no change in costs and expenses.
2. Change the compensation of salespersons from fixed annual salaries totaling $204,100 to total salaries of $40,100 plus a 5% commission on net sales.
3. 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 dollars for 2014. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

Break-even point

$

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question