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Question: group work question 2 6 marks santas toys manufacturings...

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Group work # Question 2 (6 Marks) Santas Toys Manufacturings sales slumped badly in 2008 due to so many people purchasing gifts online. The companys income statement showed the following results from selling 500,000 units of product: net sales $2,125,000; total costs and expenses $2,500,000; and net loss $375,000. Costs and expenses consisted of the following: 000,000 ariable 200,000 Fixed Cost of goods sold Selling expenses S1,300,000 S 700,000 150,000 Administrative expenses 300,000 150,000 150,000 2.500,000 SL500,000 $1000,000 50,000 Management is considering the following alternative for 2009: Purchase new automated equipment that will change the proportion between variable and fixed expenses sold to 45% variable and 55% fixed. Instructions (a) Compute the break-even point in dollars for 2008. (b) Compute the break-even point in dollars under the alternative course of action.
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