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 79,000 units of product: net sales $ 1,975,000; total costs and expenses $ 1,805,000; and net loss $ -170,000. Costs and expenses consisted of the following.

		Total		Variable		Fixed
Cost of goods sold		$ 1,148,000		$ 645,000		$ 503,000
Selling expenses		510,000		90,000		420,000
Administrative expenses		147,000		55,000		92,000
		$ 1,805,000		$ 790,000		$ 1,015,000

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 $ 205,000 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 2017. (Round contribution margin ratio to 2 decimal places e.g. 0.25 and final answer to 0 decimal places, e.g. 2,510.)

Break-even point

$ enter the break-even point in dollars rounded to 0 decimal places

(b) Compute the break-even point in dollars under each of the alternative courses of action. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.)

				Break-even point
1.		Increase selling price		$ enter a dollar amount rounded to 0 decimal places
2.		Change compensation		$ enter a dollar amount rounded to 0 decimal places
3.		Purchase machinery		$ enter a dollar amount rounded to 0 decimal places

Which course of action do you recommend? select a course of action using the break-even analysisselect a course of action using the break-even analysis Alternative 1Alternative 2Alternative 3