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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

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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 77,000 units of product: net sales $1,540,000; total costs and expenses $1,636,000; and net loss $96,000. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $967,000 520,000 149,000 $1,636,000 $466,000 94,000 56,000 $616,000 $501,000 426,000 93,000 $1,020,000 Management is considering the following independent alternatives for 2017 Increase unit selling price 25% with no change in costs and expenses 2. Change the compensation of salespersons from fixed annual salaries totaling $197,000 to total salaries of $40,000 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 0 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 contribution margin ratio to 4 decimal places e.g. 0.2510 and final answers to o decimal places, e.g. 2,510.) Break-even point 1. Increase selling price 2. Change compensation 3. Purchase machinery Which course of action do you recommend

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