|The Boston Company (a sole proprietorship) expects to operate at a loss next year on its two products, as shown here:

Not So Commons Commons Total Production and sales (units) 100,000 20,000 120,000 Sales revenue $200,000 $100,000 $300,000 Variable costs (140,000) (40,000) (180,000)

Contribution margin $ 60,000 $ 60,000 $120,000 Less: Fixed costs (172,240)

Loss ($ 52,240)

Boston has two plans that it believes will improve its profit (reduce its loss) next year: Plan A—to spend $41,000 on an advertising plan to increase the number of Not So Com- mons sold without affecting the number of Commons sold Plan B—to reduce the selling price of Not So Commons from $5 per unit to $4 per unit; this plan should change the product mix so that one Not So Common is sold for every two Commons Required: (1) If Boston follows neither of the two plans, so that its product mix is one Not So Common sold for each five Commons sold, what must total dollar sales volume be for the company to break even?
(2) If Boston follows Plan A, how many Not So Commons must it sell next year to break even? (The number of Commons sold will still be 100,000.)
(3) If Boston follows Plan B, what total dollar sales volume is required for it to break even?
(4) Compare your answers to (1) and (3). Explain the result obtained from this comparison.  Lo1