Keppel Manufacturing had a bad year in 2010. For the first time in its history it operated at a loss.The company's income statement showed the following results from selling 60,000 units of product: Net sales $1,500,000; total costs and expenses $1,890,000; and net loss $390,000. Costs and expenses consisted of the amounts shown on the next page.

Management is considering the following independent alternatives for 2011.1. Increase unit selling price 40% with no change in costs, expenses, and sales volume.2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $30,000 plus a 4% 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.Instructions(a) Compute the break-even point in dollars for 2010.(b) Compute the break-even point in dollars under each of the alternative courses of action.Which course of action do yourecommend?

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Total Variable $930,000 65,000 55,000 $1,050,000 Fixed Cost of goods sold Selling expenses Administrative expenses $1,350,000 $420,000 355,000 65,000 120,000 $840,000 $1,890,000