Wildhorse 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 520,500 units of product: sales $2,602,500, total costs and expenses $2,699,520, and net loss $97,020. Costs and expenses consisted of the following amounts.

		Total		Variable		Fixed
Cost of goods sold		$2,220,660		$1,707,240		$513,420
Selling expenses		260,250		95,772		164,478
Administrative expenses		218,610		70,788		147,822
		$2,699,520		$1,873,800		$825,720

Management is considering the following independent alternatives for 2023.

1.		Increase unit selling price 20% with no change in costs, expenses, and sales volume.
2.		Change the compensation of salespersons from fixed annual salaries totaling $156,150 to total salaries of $62,460 plus a 5% commission on sales.

(a)

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Your answer is correct.

Compute the break-even point in dollars for 2022.

Break-even point

$enter the break-even point amount in dollars

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(b)

Compute the contribution margin ratio under each of the alternative courses of action. (Round answers to 2 decimal places, e.g 21.22.)

Contribution margin ratio for alternative 1		enter the contribution margin ratio for alternative 1 in percentage %
Contribution margin ratio for alternative 2		enter the contribution margin ratio for alternative 2 in percentage %

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

Break-even point for alternative 1		$enter the break-even point for alternative 1 in dollars
Break-even point for alternative 2		$enter the break-even point for alternative 2 in dollars

Which course of action do you recommend? select between alternative 1 and alternative 2 Alternative 1Alternative 2