PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 Sales (240,000 units) $1,200,000 Cost of goods sold 800,000 Gross profit 400,000 Operating expenses Selling $280,000 Administrative 150,000 430,000 Net loss $ (30,000) 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. Instructions (Round to nearest unit, dollar, and percentage, where necessary. Use the CVP income statement format in computing profits.) (a) Compute the break-even point in total sales dollars and in units for 2017. (b) Peri has proposed a plan to get the partnership "out of the red" and improve its profit- ability. 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. Peri estimates that sales volume will increase by 25%. What effect would Peri's plan have on the profits and the break-even point in dollars of the partnership? (Round the contribution margin ratio to two decimal places.) (c) 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 Peri'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 $40,000. Paul quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. What effect would Paul's plan have on the profits and the break-even point in dollars of the partnership? (d) Which plan should be accepted? Explain your answer. + in o C EF 1 The condensed income statement for the Peri and Paul partnership for 2017 is as follows. Given Peri And Paul Company Income Statement For the Year Ended December 31,2017 7 Sales (240,000 units) $1,200,000 8 Cost of Goods Sold $800,000 9 Gross Profit $400,000 10 Operating Expenses 11 Selling $280,000 12 Administrative $150,000 $430,000 13. Net Loss ($30,000) 14 Variable Cost of Goods Sold 75.0% 15 Variable Selling Expenses 42.0% 16 Variable Administrative Expenses 40.0% 18 a Compute the break-even point in total sales dollars and in units for 2017. Unic % 20 Selling Price $5.00 100.0% 21 Variable cost 22 Cost of Goods Sold $2.50 50.00% 23 Selling $0.49 9.80% 24 Administrative $0.25 5.00% 25 Contribution $1.76 35.20% 26 Fixed Cost Cost of Goods Sold $200,000 28 Selling $162,400 Administrative $90,000 Break Even Units Fixed Cost $452,400 257,045 CM per Unit $1.76 Break Even $ Fixed Cost CM Margin % 35.20% $452,400 1.285,227 I K L b. Peri 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. Peri estimates that sales volume will increase by 25%. What effect would Peri's plan have on the profits and the break-even point in dollars of the partnership? Unit Selling Price Variable cost Fixed Cost Peri And Paul Company Income Statement For the Year Ended December 31, 2017 Operating Expenses Contribution Margin Fixed Cost Total Fixed Break Even $ O P Q R c. 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 Peri'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 $40,000. Paul quoted an g research report that said that sales volume would increase by 60% if these changes were made. What effect would Paul's plan have on the profits and the break-even point in dollars of the partnership? Unit Selling Price Variable cost Fixed Cost Peri And Paul Company Income Statement line For the Year Ended December 31, 2017 Operating Expenses Contribution Margin Fixed Cost La Total Fixed Break Even $ Help Tell me what you want to do ISKI DATI OOOO AL130 convert to SmartArt Find war Replace Select Paragraph CT 11-2 ADMN - 919 Final Project The condensed income statement for the Peri and Paul partnership for 2017 is as follows. a) Compute the break-even point in total sales dollars and in units for 2017. $1,200,000 $800,000 $400,000 Given Peri And Paul Company Income Statement For the Year Ended December 31,2017 Sales (240,000 units) Cost of Goods Sold Gross Profit Operating Expenses Selling $280,000 Administrative $150,000 Net Loss Variable Cost of Goods Sold Variable Selling Expenses Variable Administrative Expenses $430,000 ($30,000) 75.0% 42.0% 40.0% Tell me what you want to do Il Text Direction NOOO Align Text A2733 StoA Find Replace Arrange the Select graph ADMN-919 Final Project CT 11-2 b. Peri 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 S0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Peri estimates that sales volume will increase by 25%. What effect would Peri's plan have on the profits and the break-even point in dollars of the partnership? Show a new Income statement and detail to Breakeven-use excel template . ADMN - 919 Final Project-Student (1).pptx . Saved to this PC Tell me what you want to do lih Text Direction DOO her Find Alion A2213 Replace Convert to SmartArt 2 { } Select- graph Editing ADMN - 919 Final Project CT 11-2 (c) 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 Peri'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 $40,000. Paul quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. What effect would Paul's plan have on the profits and the break-even point in dollars of the partnership? Show a new Income statement and detail to Breakeven-use excel template A Z Z . B . Arrange Quick - Styles Drawing Shape Outline Shape Effects Find Replace Select - Editing ADMN - 919 Final Project CT 11-2 (a) Which plan should be accepted? Explain your