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Concord Corp.s sales slumped badly in 2017. For the first time in its history, it...

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Accounting

Concord Corp.s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 540,500 units of product: sales $2,702,500, total costs and expenses $2,810,600, and net loss $108,100. Costs and expenses consisted of the amounts shown below.

Total

Variable

Fixed
Cost of goods sold $2,313,340 $1,718,790 $594,550
Selling expenses 270,250 99,452 170,798
Administrative expenses 227,010 73,508 153,502
$2,810,600 $1,891,750 $918,850

Management is considering the following independent alternatives for 2018.
1. Increase unit selling price 21% with no change in costs, expenses, and sales volume.
2.

Change the compensation of salespersons from fixed annual salaries totaling $162,150 to total salaries of $64,860 plus a 6% commission on sales.

(a) Compute the break-even point in dollars for 2017.

(b) Compute the break-even point in dollars under each of the alternative courses of action

Which course of action do you recommend?

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