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 80,000 units of product: net sales $1,600,000; total costs and expenses $1,815,200; and net loss $215,200. Costs and expenses consisted of the following.

		Total		Variable		Fixed
Cost of goods sold		$1,156,000		$650,000		$506,000
Selling expenses		512,200		93,000		419,200
Administrative expenses		147,000		57,000		90,000
		$1,815,200		$800,000		$1,015,200

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 $45,010 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

?

(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		$?
2.		Change compensation		$?
3.		Purchase machinery		$?

Which course of action do you recommend? Select an option between Alternative 1, 2, or 3.