Peri & Paul's condensed partnership statement of income for the year 2017 is as follows:

PERI & PAUL COMPANY Income Status For the year ending December 31, 2017 Sales(240,000 units) $1,200,000 cost of goods sold (COGS) 800,000 Gross profit 400,000 Operational expenses: selling expenses $280,000 Administrative expenses $150,000 430,000 Net loss ($30,000)

The analysis of the behavior of the costs indicates that the following are variables: 75% of the cost of the merchandise sold, 50% of the selling expenses and 25% of the administrative expenses. Case instructions: Round to the nearest unit, nearest percent, or nearest dollar. Submit the income statement in CVG (cost-volume-profit) format, with the earnings computation.

a) Compute the breakeven point (BEP) of sales in units and in dollars for the year 2017.

b) Peri has proposed a plan to get the company out of losses and improve its profitability. She believes that product quality could be greatly improved by paying $0.25 more per unit for better direct material. The selling price per unit could only be increased to $5.25 per unit, due to competitive pressure. Peri estimates that the volume of sales could increase 25%. What would be the effect of the changes planned by Peri's plan on the breakeven point in dollars and the profits of the partnership? (Round the contribution margin ratio to two (2) decimal places.)

c) Paul's concentration in his high school was in marketing. He believes that sales volume can only be increased by an intensive advertising campaign, therefore he proposed the following plan as an alternative to Peri's: (1) increase variable selling expenses to $0.59 per unit; (2) reduce the sales price per unit by $0.25; and (3) increase fixed selling expenses by $40,000. Paul cited an old marketing report that stated that sales would increase by 60%. If these changes were made, what would be the effect of the proposed changes in Paul's plan on the breakeven point in dollars and the profits of the partnership?

d) Which plan should be accepted?