/19 Barbara has proposed a plan to get the partnership "out of the red" and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.30 more per unit on better raw materials. The selling price per unit could be increased to only $5.30 because of competitive pressures. Barbara estimates that sales volume will increase by 25% Calculate the break-even point in total sales dollars and in units under the proposed plan. (Round contribution margin per unit and contribution margin ratio to 2 decimal places, eg. 15.25 or 15.25% and final answers to O decimal places, eg. 5.275) Break-even point in sales Break-even point in units What effect would Barbara's plan have on the partnership's operating income and its break-even point in dollars? This plan would It effect on the break-even point in units, but the operating income before tax from a of $ break-even point in sales dollars beca to an -/19 Michael was a marketing major in university. He believes that the sales volume can be increased only by intensive advertising and promotional campaigns. He therefore proposed the following plan as an alternative to Barbara's: (1) increase variable selling expenses to $0.60 per unit, (2) lower the selling price per unit by $0.30, and (3) increase fixed selling expenses by $34,400. Michael quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made Calculate Michael's break-even point in dollars and units. (Round contribution margin per unit and contribution margin ratio to 2 decimal places, eg. 15.25 or 15.25% and final answers to O decimal places, e.g. 5,275.) Break-even point in sales $ Break-even point in units Question Part Score Determine which plan should be accepted. should be accepted. -16