Tanek Corp.s sales slumped badly in 2022. For the first time in its history, it operated at a loss. The companys income statement showed the following results from selling 500,000 units of product: sales $ 2,500,000, total costs and expenses $ 2,590,000, and net loss $ 90,000. Costs and expenses consisted of the following amounts.

		Total		Variable		Fixed
Cost of goods sold		$ 2,140,000		$ 1,590,000		$ 550,000
Selling expenses		250,000		92,000		158,000
Administrative expenses		200,000		68,000		132,000
		$ 2,590,000		$ 1,750,000		$ 840,000

Management is considering the following independent alternatives for 2023.

1.		Increase the unit selling price 20% with no change in total costs, total expenses, and sales volume.
2.		Change the compensation of sales personnel from fixed annual salaries totaling $ 140,000 to total salaries of $60,000 plus a 5% commission on sales. All other total costs, total expenses, and total sales remain unchanged.

Compute the contribution margin ratio under each of the alternative courses of action.

Contribution margin ratio for alternative 1		%
Contribution margin ratio for alternative 2		%

Compute the break-even point in sales dollars under each of the alternative courses of action.

Break-even point for alternative 1		$
Break-even point for alternative 2		$

Which course of action do you recommend? select an alternative, Alternative 1 or Alternative 2