The condensed income statement for the Blossom and Paul partnership for 2020 is as follows. Blossomand Paul
Question:
The condensed income statement for the Blossom and Paul partnership for 2020 is as follows.
Blossomand Paul Company
Income Statement
For the Year Ended December 31, 2020
Sales (240,000 units)$1,200,000Cost of goods sold800,000Gross profit400,000Operating expensesSelling$280,000Administrative156,000436,000Net loss$(36,000)
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.
Blossom 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 $0.30 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Blossom estimates that sales volume will increase by 25%. Compute the net income under Blossom's proposal and the break-even point in dollars.
- I am struggling to find the break even point in sales dollars. Any help would be appreciated