Long Weekend Ltd suffered a severe drop in sales and profit performance for the year ended 30 June 2015. The income statement revealed that net sales were $1500000 with a profit of $310000. Unit sales were 300000, and total costs were $1190000. A breakdown of costs and expenses is presented below:

	Fixed		Variable			Total
Cost of sales (includes manufacturing costs) Selling expenses Administration expenses	$	350000 108000   72000	$	600000 36000   24000	$	950000 144000     96000
Total	$	530000	$	660000	$	1190000

In response to the bad result, management is considering a number of options for the year ending 30 June 2016 to try to improve performance. Independent policy options being considered are set out below:

1. Update factory machinery and production methods to adjust the mix of fixed and variable cost of sales (which includes manufacturing costs) to 40% fixed and 60% variable.

2. Increase the selling price by 15%, with no changes to costs and expenses but unit sales will decrease 10%.

3. Change the manner in which sales staff are remunerated. It is proposed to pay sales staff on the basis of a base salary of $32000 plus a 5% commission on net sales. The current policy is to pay fixed total salaries of $105000.

Required

A. Calculate the break-even point in dollars of sales for the year ended 30 June 2015.

B. Calculate the break-even point and profit for each of the options being considered by management.

C. What action should be recommended to management? Explain why