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Sheridan Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed

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Sheridan Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 91,200 units of product: net sales $ 2,280,000; total costs and expenses $ 2,547,900; and net loss $ 267,900. Costs and expenses consisted of the following. Cost of goods sold Selling expenses Administrative expenses Total Variable Fixed $ 1,787,520 $1,197,000 $ 590,520 589,380 104,880 484,500 171,000 66,120 104,880 $ 2,547,900 $1,368,000 $1,179,900 Management is considering the following independent alternatives for 2022. 1. 2. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $ 228,000 to total salaries of $ 45,600 plus a 5% commission on net sales. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50 3. (a) Compute the break-even point in sales dollars for 2021. (Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answer to decimal places, e.g. 2,510.) Break-even point $ (b) Compute the break-even point in sales dollars under each of the alternative courses of action for 2022. (Round contribution margin ratio to 3 decimal places eg. 0.251 and final answers to decimal places, eg. 2,510.) Break-even point 1. Increase selling price 2. Change compensation $ 3. Purchase machinery $ Which course of action do you recommend

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