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BACK Midlands Inc. had a bad year in 2016. For the first time in its history. It operated at a loss. The company's income statement
BACK Midlands Inc. had a bad year in 2016. For the first time in its history. It operated at a loss. The company's income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1.624,000, and net loss $64,000. Costs and expenses consisted of the following NEXT Cost of goods sold Selling expenses Administrative expenses Total $948,000 523,000 153,000 $1,624,000 Variable $473,000 93,000 58,000 $624,000 $475,000 430,000 95,000 $1,000,000 Management is considering the following independent alternatives for 2017 1. Increase unit selling price 30% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $199,000 to total salaries of $45.000 plus commission on net sales 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2016. (Round contribution marginate to 2 decimal places 0.25 and inal answer to decimal places,..2,510.) Break-even point (b) Compute the break-even point in dollars under each of the alternative courses of action for 2017 (Round contribution margin ratio to 4 decimal places.g. 0.2510 and final answers to decimal places, e.g. 2,510.) 1. Increase selling price 2. Change compensation 3. Purchase machinery Which course of action do vou recommend
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