Break-even point for 2020 is $3,177,000

*Which course of action do you recommend? Alternative 1 or Alternative 2

Problem 18-4A a-b (Part Level Submission) (Video) Sandhill 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 560,500 units of product: sales $2,802,500, total costs and expenses $2,907,360, and net loss $104,860. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses Total $2,391,700 280,250 235,410 $2,907,360 Variable $1,838,440 103,132 76,228 $2,017,800 Fixed $553,260 177,118 159,182 $889,560 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 20% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $168,150 to total salaries of $67,260 plus a 4% 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 action. Break-even point for alternative 1 + Break-even point for alternative 2 Which course of action do you recommend