Sales (240,000 units) $1,200,000

Cost of goods sold 768,000

Gross profit 432,000

Operating expenses

Selling $280,000

Administrative 156,000

436,000

Net loss$ (4,000)

How to calculae net income & break-even point? Crane 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. Crane estimates that sales volume will increase by 25%. Compute the net income under Crane's proposal and the break-even point in dollars.