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please answer full question The condensed income statement for the Michelle and Kevin partnership for 2022 is as follows. Michelle and Kevin Company Income Statement
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The condensed income statement for the Michelle and Kevin partnership for 2022 is as follows. Michelle and Kevin Company Income Statement For the Year Ended December 31, 2020 Sales (288,000 units) $1,440,000 Cost of goods sold 960,000 Gross profit 480,000 Operating expenses Selling $360,000 Administrative 183,000 543,000 Net loss $(63,000) A cost behavior analysis indicates that 75% of the cost of goods sold are variable and 40% of the selling expenses are variable. Administrative expenses are $111,000 fixed. Act GO Compute the break-even point in total sales dollars for 2022. (Round intermediate calculations to 2 decimal places, eg. 15.25 and final answers to decimal places, eg. 2,520.) Break-even point in dollars $ Michelle 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 $0.32 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Michelle estimates that sales volume will increase by 25%. Compute the net income under Michelle's proposal and the break-even point in dollars. (Round intermediate calculations to 4 decimal places, eg. 15.2515 and final answers to 2 decimal places, eg. 15.25.) Amount Net income $ Break-even point $ Activate Go to Sett Kevin 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 Michelle's: (1) increase variable selling expenses to $0.575 per unit (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $61,200. Kevin 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 Kevin's proposal and the break-even point in dollars. (Round intermediate calculations to 3 decimal places, eg. 15.251 and final answers to 0 decimal places, e.g. 2,520.) Amount Net income $ Break-even point $ Which plan should be accepted? should be accepted. Activate vStep by Step Solution
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