U4 330

Sunland 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 92,800 units of product: net sales $2,320,000; total costs and expenses $2,592,600; and net loss $272,600. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,818,880 $1,218,000 $600,880 Selling expenses 599,720 106,720 493,000 Administrative expenses 174,000 67,280 106,720 $2,592,600 $1,392,000 $1,200,600 Management is considering the following independent alternatives for 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $232,000 to total salaries of $46,400 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 sales dollars for 2021. (Round contribution margin ratio to 4 decimal places eg. 0.2512 and final answer to 0 decimal places, e.g. 2,510.) Break-even point $ 3001500 (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 e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) Break-even point 1. Increase selling price $ 2801402.8 2. Change compensation $ 2900000 3. Purchase machinery $ 2831445 Which course of action do you recommend? Alternative 1