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Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company s income statement showed the following results from selling 76,500 units of product: Net sales \$1,484,100; total costs and expenses \$1,722,200; and net loss \$238,100. Costs and expenses consisted of the following.

 Total Variable Fixed Cost of goods sold \$1,198,300 \$775,600 \$422,700 Selling expenses 420,800 78,000 342,800 Administrative expenses 103,100 41,000 62,100 \$1,722,200 \$894,600 \$827,600

Management is considering the following independent alternatives for 2014.

 1 Increase unit selling price 24% with no change in costs and expenses. 2 Change the compensation of salespersons from fixed annual salaries totaling \$195,100 to total salaries of \$38,800 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 2014.(Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers 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.(Round contribution margin ratio to 4 decimal places e.g. 0.2512 and final answers to 0 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