ACC 321: BBAs1 Problem (chapter 3) The condensed income statement for the Jerry and Mary partnership for 2018 follows: Jerry and Mary Company Income Statement For the Year Ended December 31, 2018 Sales (200,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $320,000 Administrative 160,000 480,000 Net loss ($80,000) Additional cost behavior information gotten from analysis indicates that 75% of the cost of goods are variable, 50% of the selling expenses are variable, and 25% of the administrative expenses are variable. Requirments: a) Redo the above income statement into a Contribution income statement in good form (see notes) b) Calculate the breakeven point in sales $ and units sold for 2018. c) Determine the needed sales $ or units sold to earn a target profit of $20,000 for 2019. d) Use Sensitivity analysis to predict which of the partner's strategies would be the most successful in improving the profitability of the partnership for the future. The two proposed strategies follow: 1) Mary has proposed a plan to get the partnership out of the red" and improve its prof- itability. She feels that the quality of the product could be substantially improved by spending $0.55 more per unit on better raw materials. The selling price per unit could be increased to only $6.50 because of competitive pressures. Mary estimates that sales volume will increase by 30%. What effect would Mary's plan have on the profits and the break- even point in dollars of the partnership? 2) Jerry was a marketing major in college. He believes that sales volume can be increased only by intensive advertising and promotional campaigns. He therefore proposed the fol- lowing plan as an alternative to Mary's. (1) Increase variable selling expenses to $0.90 per unit, (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $25,000. Sandy quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. What effect would Jerry's plan have on the profits and the break-even point in dollars of the partnership