Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 78,000 units of product: net sales $1,560,000; total costs and expenses $1,935,960; and net loss $375,960. Costs and expenses consisted of the following.

		Total		Variable		Fixed
Cost of goods sold		$1,258,000		$785,000		$473,000
Selling expenses		524,960		93,000		431,960
Administrative expenses		153,000		58,000		95,000
		$1,935,960		$936,000		$999,960

Management is considering the following independent alternatives for 2020.

1.		Increase unit selling price 25% with no change in costs and expenses.
2.		Change the compensation of salespersons from fixed annual salaries totaling $199,000 to total salaries of $44,990 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 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 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 for 2020. (Round contribution margin ratio to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.)

				Break-even point
1.		Increase selling price		$Enter a dollar amount
2.		Change compensation		$Enter a dollar amount
3.		Purchase machinery		$Enter a dollar amount

Which course of action do you recommend? Select an option Alternative 1Alternative 2Alternative 3

Midlands Inc had a bad year in 2019. 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 $1,935,960; and net loss $375,960. Costs and expenses consisted of the following. Total Variable Fixed $1,258,000 $785,000 $473,000 Cost of goods sold Selling expenses Administrative expenses 524,960 93,000 431,960 153,000 58,000 95,000 $1,935,960 $936,000 $999,960 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $199,000 to total salaries of $44.990 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 2019. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to decimal places, eg. 2,510.) Break-even point $ (b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to 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