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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 75,000 units of product: net sales $1,500,000; total costs and expenses $1,900,000; and net loss $400,000. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses 2. 3. Total Break-even point $ $1,240,000 1. 515,000 2. 145,000 3. Purchase machinery Management is considering the following independent alternatives for 2020. Variable $1,900,000 $900,000 1. Increase unit selling price 20% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $195,000 to total salaries of $35,000 plus a 5% commission on net sales. $755,000 Increase selling price $ 90,000 Change compensation $ 55,000 (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 O decimal places, e.g. 2,510.) $ Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (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 O decimal places, e.g. 2,510.) Which course of action do you recommend? Fixed $485,000 425,000 90,000 $1,000,000 Break-even point Alternative 1 V

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 75,000 units of product: net sales $1,500,000; total costs and expenses $1,900,000; and net loss $400,000. Costs and expenses consisted of the following. Management is considering the following independent alternatives for 2020 . 1. Increase unit selling price 20% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $195,000 to total salaries of $35,000 plus a $% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and foced cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2019. (Round contribution margin ratio to 4 decimal ploces es. 0.2512 and final answer to 0 decimal places, eg. 2,510.) $ (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 es 0.251 and final answers to 0 decimal places, eg. 2,510.) Which course of action do you recommend