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STANDARD VIEW PRINTER VERSION 1 BACK NEXT Problem 20-1A 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 79,000 units of product: net sales $1,580,000; total costs and expenses $1,637,000; and net loss $57,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $969,000 $486,000 $483,000 Selling expenses 520,000 90,000 430,000 Administrative expenses 148,000 56,000 92,000 $1,637,000 $632,000 $1,005,000 Management is considering the following independent alternatives for 2017. inm Increase unit selling price 30% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $203,000 to total salaries of $37,000 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 1675000 (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 0 decimal places, e.g. 2,510.) Break-even point 1. Increase selling price 26 2. Change compensation 18 3. Purchase machinery Which course of action do you recommend