Expand Your Critical Thinking 5-2 The condensed income statement for the Crane and Paul partnership for 2020 is as follows. Crane and Paul Company Income Statement For the Year Ended December 31, 2020 Sales (240,000 units) $1,200,000 Cost of goods sold 768,000 Gross profit 432,000 Operating expenses Selling $280,000 Administrative 156,000 436,000 Net loss $(4,000) A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. Your answer is correct. Compute the break-even point in total sales dollars for 2020. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, c.g. 2,520.) Break-even point in dollars 1210811 SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Crane 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 $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Crane estimates that sales volume will increase by 25% Compute the net income under Crane's proposal and the break even point in dollars. (Round intermediate calculations to decimal places, 9.15.2515 and final answers to o decimal places, e.g. 2,520.) Amount Net income 107000 Break-even point 1280000 SHOW SOLUTION LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again. Crane 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 $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Crane estimates that sales volume will increase by 25%. Compute the net income under Crane's proposal and the break-even point in dollars. (Round intermediate calculations to 4 decimal places, e.g. 15.2515 and final answers to o decimal places, e.g. 2,520.) Amount Net income 107000 $ Break-even point 1280000 SHOW SOLUTION x Your answer is incorrect. Try again. Paul 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 following plan as an alternative to Crane's: (1) increase variable selling expenses to $0.59 per unit, (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $43,000. Paul quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Compute the net income under Paul's proposal and the break-even point in dollars. (Round intermediate calculations to decimal places, e.. IS.2515 and final answers to 0 decimal places, e.g. 2,520.) Amount Net income 649000 Break-even point 826947 SHOW SOLUTION