“Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company  income statement showed the following results from selling 77,700 units of product: Net sales $1,554,000; total costs and expenses $1,735,700; and net loss $181,700. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,205,000 $784,700 $420,300 Selling expenses 412,900 71,600 341,300 Administrative expenses 117,800 40,200 77,600 $1,735,700 $896,500 $839,200 Management is considering the following independent alternatives for 2014. 1. Increase unit selling price 30% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $195,200 to total salaries of $36,600 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?”