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.

(b)

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, e.g. 15.2515 and final answers to 2 decimal places, e.g. 15.25.)

		Amount
Net income		$enter the net income amount in dollars
Break-even point		$enter the break even point in dollars