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 540,500 units of product: sales $2,702,500, total costs and expenses $2,803,440, and net loss $100,940. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses 1. 2 Total $2,306,180 270,250 227,010 Break-even point $ Variable $1,772,840 99,452 73,508 Management is considering the following independent alternatives for 2018. Fixed $2,803,440 $1,945,800 $857,640 Contribution margin for alternative 1 $533,340 170,798 Increase unit selling price 20% with no change in costs, expenses, and sales volume. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales. Contribution margin for alternative 2 153,502 (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, eg. 1,225.) 5850204 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to 0 decimal places, eg. 1,225.J 29 % %

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 540,500 units of product: sales $2,702,500, total costs and expenses $2,803,440, and net loss $100,940. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses 1. 2 Total $2,306,180 270,250 227,010 Break-even point $ Variable $1,772,840 99,452 73,508 Management is considering the following independent alternatives for 2018. Fixed $2,803,440 $1,945,800 $857,640 Contribution margin for alternative 1 $533,340 170,798 Increase unit selling price 20% with no change in costs, expenses, and sales volume. Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 4% commission on sales. Contribution margin for alternative 2 153,502 (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places, eg. 1,225.) 5850204 (b) Compute the contribution margin under each of the alternative courses of action. (Round final answers to 0 decimal places, eg. 1,225.J 29 % %

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 20PC: A large manufacturer of truck and car tires recently changed its cost-flow assumption method for...

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A large manufacturer of truck and car tires recently changed its cost-flow assumption method for inventories at the beginning of 2014. The manufacturer has been in operation for almost 40 years, and for the last decade it has reported moderate growth in revenues. The firm changed from the LIFO method to the FIFO method and reported the following information (amounts in millions): REQUIRED Calculate the inventory turnover ratio for 2014 using the LIFO and FIFO cost-flow assumption methods. Explain why the costs assigned to inventory under LIFO at the end of 2013 and 2014 are so much less than they are under FIFO.
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 505,500 units of product: sales $2,527,500, total costs and expenses $2,611,875, and net loss $84,375. Costs and expenses consisted of the amounts shown below. Total Variable Fixed Cost of goods sold $2,146,815 $1,733,865 $412,950 Selling expenses 252,750 93,012 159,738 Administrative expenses 212,310 68,748 143,562 $2,611,875 $1,895,625 $716,250 Management is considering the following independent alternatives for 2018. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $151,650 to total salaries of $60,660 plus a 5% commission on sales. (a) Compute the break-even point in dollars for 2017. (Round final answer to 0 decimal places,…
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