Homework SourseTanek Corps sales slumped badly in 2017 For the first time i
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,680,600, and net loss $103,100. Costs and expenses consisted of the amounts shown below.
Total
Variable
Fixed
Management is considering the following independent alternatives for 2018.
(a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, e.g. 1,225.)
(b) Compute the contribution margin under each of the alternative courses of action. (Round final answer to 0 decimal places, e.g. 1,225.)
Compute the break-even point in dollars under each of the alternative courses of action. (Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answer to 0 decimal places, e.g. 1,225.)
Which course of action do you recommend?
| Total | Variable | Fixed | ||||
| Cost of goods sold | $2,206,340 | $1,639,290 | $567,050 | |||
| Selling expenses | 257,750 | 94,852 | 162,898 | |||
| Administrative expenses | 216,510 | 70,108 | 146,402 | |||
| $2,680,600 | $1,804,250 | $876,350 |
Solution
a.
b.
c.
Alternative 1 is recommended, since the break-even point is lower.
| Break - even point | $ 2,921,167 |
