The condensed income statement for theMaryandJohnpartnership for 2022 is as follows.

MaryandJohnCompany

Income Statement

For the Year Ended December 31, 2020

Sales (192,000units)$960,000Cost of goods sold640,000Gross profit320,000Operating expensesSelling$240,000Administrative122,000362,000Net loss$(42,000)

A cost behavior analysis indicates that75% of the cost of goods sold are variable and40% of the selling expenses are variable. Administrative expenses are $74,000fixed.

Compute the break-even point in total sales dollars for 2022.(Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 2,520.)

Break-even point in dollars$

enter the break-even point in dollars

Maryhas 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 $0.32more per unit on better raw materials. The selling price per unit could be increased to only $5.25because of competitive pressures.Maryestimates that sales volume will increase by25%. Compute the net income underMary'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.)

AmountNet income$

enter the net income amount in dollars

Break-even point$

enter the break even point in dollars

Johnwas 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 toMary's: (1) increase variable selling expenses to $0.575per unit, (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $40,800.Johnquoted an old marketing research report that said that sales volume would increase by60% if these changes were made. Compute the net income underJohn's proposal and the break-even point in dollars.(Round intermediate calculations to 3 decimal places, e.g. 15.251 and final answers to 0 decimal places, e.g. 2,520.)

AmountNet income$

enter the net income amount in dollars

Break-even point$

enter the break even point in dollars

Which plan should be accepted?

select the correct plan

John's plan

Mary's plan

should be accepted.