Complete Part B

Problem 20-1A Your answer is partially correct. Try again. Midlands Inc. had a bad year 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 75,000 units of product: net sales $2,250,000; total costs and expenses $2,375,000; and net loss $125,000. Costs and expenses consisted of the following Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $1,703,000 522,000 150,000 $2,375,000 $1,195,000 95,000 60,000 $1,350,000 $508,000 427,000 90,000 $1,025,000 Management is considering the following independent alternatives for 2017 I. Increase unit selling price 25% with no change in costs and expenses 2. Change the compensation of salespersons from fixed annual salaries totaling $196,000 to total salaries of $41,000 plus a 5% 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. (a) Compute the break-even point in dollars for 2016. (Round contribution margin ratio to 2 decimal places e.g. 0.25 and final answer to 0 decimal places, e.g. 2,510.) Break-even point (b) Compute the break-even point in dollars under each of the alternative courses of action for 2017. (Round contribution margin ratio to 4 decimal places e.g. 0.2510 and final answers to o 2562510 decimal places, e.g. 2,510.) Break-even point 1. Increase selling price 2. Change compensation 3. Purchase machinery Which course of action do you recommend