Best Company earned a disappointing 5.6% after-tax return on sales ( This year net income/sales) from Problem 18- Analysis of price, cost, 68n 100.000 units of its only product. The company buys its product in bulk and rep mark compan volume changes for resale at the price of $20 per unit. Best incurred the following costs this year and contribution margin and net income Total variable unit costs, . Total variable packaging costs $800,000 A1 P2 fl $950,000 25% The marketing manager claims that next year's results will be the same as this year's unless some changes are made. The manager predicts the company can increase the number of units sold by 80% if it reduces the selling price by 20% and upgrades the packaging. This change would increase variable packaging costs by 20%. Increased sales would allo w the company to take advantage of a 25% quantity purchase discount on the cost of the bulk product. Neither the packaging change nor the volume discount would affect fixed costs, which provide an annual output capacity of 200,000 units. Required 1. Compute the break-even point in dollar sales under the (a) existing business strategy and (b) new strat. heck les for new strategy 727,273 trounded (a) Breakeven egy that alters both unit selling price and variable costs. (Round answers to the next whole dollar.) pected results of (a) the existing strategy and (b) changing to the new strategy. The statements come before taxes, income taxes, and net income. Also determine the after-tax return on sales for 2. Prepare a forecasted contribution margin income statement with two columns showing the ex- (2) Net income sting strateoy $112.500should report sales, total variable costs (unit and packaging), contribution margin, fixed costs, in- strategy. $475,500 these two strategies