Freda Paynne is anxious to learn more about the company she just inherited. She wants to continue running the business, owned and operated by her late Uncle Britt. Freda does realize that for several quarters the business has been experiencing a decline in profitability. The income statement for the company for the year ended December 31, 2020 is shown below:

Concrete Columns Income Statement For the year ended December 31, 2020

Sales (25,000 units) $ 2,350,000 Cost of Goods Sold 1,500,000 Gross Profit 850,000 Operating Expenses Selling $ 610,000 Administrative 290,500 900,500 Net Income (Loss) $ (50,500)

Ms. Paynne has contacted you to assist her in understand her business. Specifically, you are being asked to discuss the concept of breakeven and what is involved in breakeven analysis You are to provide as much detail as possible and provide computations using data from the companys 2020 income statement.

Further investigation reveals the following:

1. 60% of the cost of goods sold are variable,
2. 70% of the selling expenses are variable, and
3. 50% of the administrative expenses are variable

Present your information to Ms. Paynne in a letter, along with any attachments you might have.