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Midlands Inc. had a bad year in 2019. For the first time in its history,...

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Accounting

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Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company's income statement showed the following results from selling 80,000 units of product: net sales $1,600,000; total costs and expenses $1,824,800; and net loss $224,800. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold Selling expenses Administrative expenses $1,160,000 $652,000 $508,000 515,800 91,000 424,800 92,000 $1,824,800 $800,000 $1,024,800 149,000 57,000 Management is considering the following independent alternatives for 2020. Increase unit selling price 25% with no change in costs and expenses. Change the compensation of salespersons from fixed annual salaries totaling $195,000 to total salaries of $41,985 plus a 5% commission on net sales. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50 1. 2. 3

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