Fredonia Inc. had a bad year in 2013. For the first time in its history,

Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. Thecompany’s income statement showed the following results from selling 76,000 units of product:Net sales $1,444,000; total costs and expenses $1,736,100; and net loss $292,100. Costs andexpenses consisted of the following:TotalVariableFixedCost of goods sold$1,202,800$779,700$423,100Selling expenses412,20070,100342,100Administrative expenses121,10044,10077,000$1,736,100$893,900$842,200Management is considering the following independent alternatives for 2014.1. Increase unit selling price 25% with no change in costs and expenses.2. Change the compensation of salespersons from fixed annual salaries totaling $196,500 to totalsalaries of $38,900 plus a 5% commission on net sales.3. Purchase new high-tech factory machinery that will change the proportion between variableand fixed cost of goods sold to 50:50.(a) Compute the break-even point in dollars for 2014. (Round contribution margin ratio to 4decimal 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 decimalplaces, e.g. 2,510.)Break-even point1. Increase selling price$2. Change compensation$3. Purchase machinery$Which course of action do you recommend?Alternative 1, Alternative 2, or Alternative 3