Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it
ID: 2605328 • Letter: T
Question
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 $876,350Explanation / Answer
a.
b.
c.
Alternative 1 is recommended, since the break-even point is lower.
Break - even point $ 2,921,167Related Questions
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