P22-3A Dousmann Corp.s sales slumped badly in 2014. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 500,000 units of product: sales $2,500,000; total costs and expenses $2,600,000; and net loss $100,000. Costs and expenses consisted of the amounts shown below.

Compute break-even point under alternative courses of action.

(LO 5, 6)

	Total	Variable	Fixed
Cost of goods sold	$2,140,000	$1,540,000	$600,000
Selling expenses	250,000	92,000	158,000
Administrative expenses	210,000	68,000	142,000
	$2,600,000	$1,700,000	$900,000

Management is considering the following independent alternatives for 2015.

Cost Behavior and Cost-Volume-Profit Analysis

Go to the P22-3A problem in your text. See the Do it example for information on break even analysis (also found in the Digital Book under Course home on page1066).

Compute the breakeven point for fiscal year 2014 .

Compute the breakeven point for each alternative course of action.

What course of action do you recommend and why?