Question 4 The condensed budgeted income statement for the Phan and Nguyen partnership for 2020 is as follows: PHAN AND NGUYEN LLP Income Statement Year Ending December 31, 2020 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 behaviour analysis indicates that 75% of the cost of goods sold is variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable. (Use the CVP Income statement format in calculating profits.) Calculate the break-even point in total sales dollars and in units for 2020. (Round contribution margin per unit to 1.25, contribution margin ratio to 1 decimal place, e.g. 15.2% and final answers to 0 decimal places, e.g. 5,275.) Break-even point in sales $ Break-even point in units Calculate the break-even point in total sales dollars and in units for 2020. (Round contribution margin per unit to 1.25, contribution margin ratio to 1 decimal place, e.g. 15.2% and final answers to o decimal places, e.g. 5,275.) Break-even point in sales $ Break-even point in units LINK TO TEXT LINK TO TEXT LINK TO TEXT Phan 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. Phan estimates that sales volume will increase by 25%. Calculate the break-even point in total sales dollars and in units under the proposed plan. (Round contribution margin per unit and contribution margin ratio to 2 decimal places, e.g. 15.25 or 15.25% and final answers to o decimal places, e.g. 5,275.) Break-even point in sales $ Break-even point in units - What effect would Phan's plan have on the partnership's profits and its break-even point in dollars? Have No or No Decrease or Increase Lower or Higher V This plan would effect on the break-even point in units, but - break-even point in sales dollars because of the selling price. Increase or Decrease Loss or Profit Loss or Profit It the operating profit before tax from a of $ to a of $ Nguyen was a marketing major in university. He believes that the sales volume can be increased only by intensive advertising and promotional campaigns. He therefore proposed the following plan as an alternative to Phan'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. Nguyen quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Calculate Nguyen's break-even point in dollars and units. (Round contribution margin per unit and contribution margin ratio to 2 decimal places, e.g. 15.25 or 15.25% and final answers to o decimal places, e.g. 5,275.) Determine which plan should be accepted. Break-even point in sales - Phan's plan Break-even point in units should be accepted. Nguyen's plan LINK TO TEXT LINK 10 TEXI LINK 10 TEXI Both the plans None of the plans
