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Problem 20-1A Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company's income

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Problem 20-1A Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 78,700 units of product: Net sales $1,511,040; total costs and expenses $1,735,200; and net loss $224,160. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $1,207,200 420,400 107,600 $1,735,200 $782,300 79,500 41,700 $903,500 $424,900 340,900 65,900 $831,700 Management is considering the following independent alternatives for 2014. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $199,600 to total salaries of $37,800 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 2014. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers 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. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 decimal places, e.g. 2,510.) 1. Increase selling price 2. Change compensation 3. Purchase machinery Which course of action do you recommend? Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT

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