Blossom Corp.'s sales slumped badly in 2020. For the first time in its history, it...
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Blossom Corp.'s sales slumped badly in 2020. 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 $2,611,625, and net loss $84,125. Costs and expenses consisted of the amounts shown below. Management is considering the following independent alternatives for 2021. 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. Compute the contribution margin under each of the alternative courses of action. Contribution margin for alternative 1 % Contribution margin for alternative 2 % Compute the break-even point in dollars under each of the alternative courses of ac Break-even point for alternative 1 $ Break-even point for alternative 2 $ Which course of action do you recommend
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Blossom Corp.'s sales slumped badly in 2020. 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 $2,611,625, and net loss $84,125. Costs and expenses consisted of the amounts shown below. Management is considering the following independent alternatives for 2021. 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. Compute the contribution margin under each of the alternative courses of action. Contribution margin for alternative 1 % Contribution margin for alternative 2 % Compute the break-even point in dollars under each of the alternative courses of ac Break-even point for alternative 1 $ Break-even point for alternative 2 $ Which course of action do you recommend 