Delgado Manufacturing's sales slumped badly in 2016. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 500,000 units of product: net sales $2.5 million, total costs and expenses $2.6 million, and net loss $100,000. Costs and expenses were as follows:

Management is considering the following independent alternatives for 2017:
1. Increase the unit selling price by 40% with no change in costs and expenses.
2. Change the compensation of salespersons from fixed annual salaries totalling $150,000 to total salaries of $60,000 plus a 5% commission on net sales.
Instructions
(a) Calculate the break-even point in dollars for 2016.
(b) Calculate the break-even point in dollars under each of the alternative courses of action. (Round to nearest full percent.) Which course of action do you recommend?

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Total Variable Cost of goods sold Selling expenses Administrative expenses $2,140,000 250,000 210,000 $2,600,000 $1,540,000 92,000 68,000 $1,700,000 Fixed $600,000 158,000 142,000 $900,000