Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed thefollowing results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss$280,200. Costs and expenses consisted of the following.TotalVariableFixedCost of goods sold$1,106,000$598,000$508,000Selling expenses522,20095,000427,200Administrative expenses152,00057,00095,000$1,780,200$750,000 $1,030,200Management is considering the following independent alternatives for 2020.1.Increase unit selling price 25% with no change in costs and expenses.2.3.Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,010 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 to50:50.(a) Compute the break-even point in dollars for 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to 0decimal places, e.g. 2,510.)Break-even point(b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to3 decimal places e.g. 0.251 and final answers to O decimal places, eg. 2,510.)Break-even point1. Increase selling price$2.Change compensation$3.Purchase machinery$Which course of action do you recommend?

Name: Midlands Inc. had a bad year in 2019. For the first time in its histo
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Description: Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed thefollowing results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,20

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Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 Administrative expenses 152,000 95,000 57,000 427,200 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1 Increase unit selling price 25% with no change in costs and expenses.

Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 Administrative expenses 152,000 95,000 57,000 427,200 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1 Increase unit selling price 25% with no change in costs and expenses.

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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