McCure Corporation had a bad year in 2013, operating at a loss for the first time in its history. The company€™s income statement showed the following results from selling 200,000 units of product: net sales $2,400,000; total costs and expenses $2,472,000; and net loss $72,000. Costs and expenses consisted of the following.

Management is considering the following independent alternatives for 2014.
1. Increase unit selling price 25% with no change in costs and expenses.
2. Change the compensation of salespersons from fixed annual salaries totaling $170,000 to total salaries of $50,000 plus a 6% 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 40:60.

Instructions
(a) Compute the break-even point in dollars for 2014.
(b) Compute the break-even point in dollars under each of the alternative courses of action. Which course of action do you recommend? Round to the nearestdollar.

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Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $1,486,000 $1,070,000 $416,000 325,000 195,000 $2,472,000 $1,536,000 936,000 681,000 305,000 356,000 110,000