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Query company’s projected income statement shows the following results from selling 100,000 units of product. Net sales are $2,000,000 – total expenses are $1,760,000 – net income is $240,000. The details of the expenses are as following:
FIXED VARIABLE TOTAL
Cost of goods sold $420,000.00 $780,000.00 $1,200,000.00
Selling expenses $340,000.00 $100,000.00 $440,000.00
Administrative expenses $60,000.00 $60,000.00 $120,000.00
Total Expenses $820,000.00 $940,000.00 $1,760,000.00
Compute the break-even point in dollars and units for each of the independent alternatives:
1. Increase unit selling price by 20% with no change in variable or fixed costs.
2. Increase the sales volume by 20% but keep the price per unit the same.
3. Change the compensation of salespersons (selling expenses) to 10% commission of sales with no fixed cost.
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