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P6.1A (LO 1), AN Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The
P6.1A (LO 1), AN 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 80,000 units of product: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following. 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 $200,000 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. Instructions a. Compute the break-even point in dollars for 2019. b. Compute the break-even point in dollars under each of the alternative courses of action for 2020 . (Round to the nearest dollar.) Which course of action do you recommend
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