The condensed income statement for the Sandhill and Paul partnership for 2020 is as follows.

Sandhilland Paul Company

Income Statement

For the Year Ended December 31, 2020

Sales (270,000 units)$1,350,000Cost of goods sold864,000Gross profit486,000Operating expensesSelling$315,000Administrative175,500490,500Net loss$(4,500)

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.

Paul 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 Sandhill'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 $43,000. Paul 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 Paul's proposal and the break-even point in dollars.

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