# Midlands inc had a bad year in 2016. For the first time in its history, it operated at a loss....

## Question:

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 78,000 units of product; net sales $1,950,000; total costs and expenses$1,795,000; and net loss $-155,000. Costs and expenses consisted of the following. Management is considering the following independent alternatives for 2017. 1. Increase unit selling price 30% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling$202,000 to total salaries of $41,000 plus a 5% comminssion on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. a. computer the break-even point in dollars for 2017. b. compute the break-even point in dollars under each of the alternative courses of action. 1. Increase selling price$

2. Change compensation $_ 3. Purchase machinery$

Which course of action do you recommend?