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 76,000 units of product: net sales $1,520,000; total costs and expenses $1,780,000; and net loss $260,000. costs and expenses consisted of the following.
total variable fixed
cost of goods sold 1,117,000 $611,000 $506,000
selling expenses 514,000 93,000 421,000
administrative expenses 149,000 56,000 93,000
1,780,000 $760,000 $1,020,000
management is considering the following independent alternatives for 2017.
1. income unit price 30% with no change in costs and expenses.
2. change the con position of a salesperson from fixed annual sales totaling $199,000 to total salaries of $36,000 plus a 5% commission on net sales.
3. purchase new high-tech factory machinery that will change the proportion between the variable and fixed cost of goods sold to 50: 50.
(a) compute the break-even point in dollars for 2016.
(b) compute the break-even point in dollars under each of the alternatives courses of action for 2017.