Gorham Manufacturing's sales slumped badly in2010. For the first time in its history, it operated at a loss. Thecompany's income statement showed the following results fromselling 618,000 units of product: Net sales $2,472,000; total costsand expenses $2,616,200; and net loss $144,200. Costs and expensesconsisted of the amounts shown below.
| Total |
Variable |
Fixed |
| Cost of goods sold |
$2,163,000 |
$1,483,200 |
$679,800 |
| Selling expenses |
247,200 |
74,160 |
173,040 |
| Administrative expenses |
206,000
|
49,440
|
156,560
|
|
$2,616,200
|
$1,606,800
|
$1,009,400
|
Management is considering the following independent alternativesfor 2011.
- Increase unit selling price 20% with no change in costs,expenses, and sales volume.
- Change the compensation of salespersons from fixed annualsalaries totaling $216,300 to total salaries of $61,800 plus a 5%commission on net sales.
Compute the break-even point in dollars for2010.
Compute the break-even point in dollars under each of the alternative courses of action. (Round unit price to 2 decimal places, e.g.3.20, all ratios to 3 decimal places, e.g. 0.450 and final answersto 0 decimal places, e.g. 2,250,100.)