Tanek Corp.'s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling585,500units of product: sales $2,927,500, total costs and expenses $3,044,600, and net loss $117,100. Costs and expenses consisted of the amounts shown below.

Total Variable Fixed

Cost of goods sold $2,505,940 $1,861,890 $644,050

Selling expenses 292,750 107,732 185,018

Administrative expenses 245,910 79,628 166,282

$3,044,600 $2,049,250 $995,350

Management is considering the following independent alternatives for 2018.

1.Increase unit selling price24% with no change in costs, expenses, and sales volume.

2.Change the compensation of salespersons from fixed annual salaries totaling $175,650to total salaries of $70,260plus a6% commission on sales.

a) Compute the break-even point in dollars for 2017.(Round final answer to 0 decimal places, e.g. 1,225.)

b)Compute the contribution margin under each of the alternative courses of action.(Round final answer to 0 decimal places, e.g. 1,225.)

Contribution margin for alternative 1. %

Contribution margin for alternative 2. %

Compute the break-even point in dollars under each of the alternative courses of action.(Round selling price per unit to 2 decimal places, e.g. 5.25 and other calculations to 0 decimal places, e.g. 20% and also final answer to 0 decimal places, e.g. 1,225.)

Break-even point for alternative 1 $

Break-even point for alternative 2 $

Which course of action do you recommend?