Compute the contribution margin under each of the alternative courses of action.

Contribution margin for alternative 1		%
Contribution margin for alternative 2		%

Compute the break-even point in dollars under each of the alternative courses of action.

Break-even point for alternative 1		$
Break-even point for alternative 2		$

Which course of action do you recommend?

Alternative 1Alternative 2

Problem 22-04A (Video) Sheridan Corp.'s sales slumped badly in 2020. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 515,500 units of product: sales $2,577,500, total costs and expenses $2,663,375, and net loss $85,875. Costs and expenses consisted of the amounts shown below. Cost of goods sold Selling expenses Administrative expenses Total $2,189,115 257,750 216,510 $2,663,375 Variable $1,768,165 94,852 70,108 $1,933,125 Fixed $420,950 162,898 146,402 $730,250 Management is considering the following independent alternatives for 2021. 1. Increase unit selling price 25% with no change in costs, expenses, and sales volume. 2. Change the compensation of salespersons from fixed annual salaries totaling $154,650 to total salaries of $61,860 plus a 5% commission on sales. Compute the break-even point in dollars for 2020. Break-even point &