Midlands Inc. had a bad year in 2016. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 77,000 units of product: net sales $1,540,000; total costs and expenses $1,795,000; and net loss $255,000. Costs and expenses consisted of the following.

		Total		Variable		Fixed
Cost of goods sold		$1,120,000		$618,000		$502,000
Selling expenses		522,000		92,000		430,000
Administrative expenses		153,000		60,000		93,000
		$1,795,000		$770,000		$1,025,000

Management is considering the following independent alternatives for 2017.

1.		Increase unit selling price 20% with no change in costs and expenses.
2.		Change the compensation of salespersons from fixed annual salaries totaling $201,000 to total salaries of $36,000 plus a 5% 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 margin ratio to 2 decimal places e.g. 0.25 and final answer to o decimal places, e.g. 2,510.) Break-even point (b) Compute the break-even point in dollars under each of the alternative courses of action for 2017. (Round 2050000 contribution margin ratio to 4 decimal places e.g. 0.2510 and final answers to o0 decimal places, e.g. 2,51o.) Break-even point 1. Increase selling price 2. Change compensation 3. Purchase machinery 1757143 2151206 Which course of action do you recommend? Alternative Alternative 1