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Peri & Paul's condensed partnership statement of income for the year 2017 is as follows: Peri & Paul Company income status For the year ended December 31, 2017 Sales (240,000 units) $1,200,000 Cost of Goods Sold (COGS) 800,000 Gross Profit 400,000 Operational expenses: Selling expenses $280,000 Administrative Expenses $150,000 430,000 Net loss ($30,000) An analysis of cost behavior indicates that the following are variables: 75% of the cost of merchandise sold, 50% of selling expenses, and 25% of administrative expenses. Case instructions: Round to the nearest unit, nearest percent, or nearest dollar, or to the nearest percent. Submit the income statement in CVG (cost-volume-profit) format, with the earnings computation. A.Calculate the break-even point (BEP-) of sales in units and in dollars for the year 2017. B.Peri has proposed a plan to get the company out of losses and improve its profitability. She believes that the quality of the product could pay to be improved with appreciation at $0.25 more per unit of better direct material. The selling price per unit could only be increased to $5.25 per unit, due to competitive pressure. Peri estimates that the volume of sales could increase by 25%. What would be the effect of the changes planned by Peri's plan on the breakeven point in dollars and the profits of the partnership? (Round the fringe contribution percentage to two decimal places.) C. Paul's major in her high school was in marketing. He believes that sales volume can only be increased with an intensive advertising campaign, therefore he probably plans the following as an alternative to Peri's: (1) increase variable selling expenses to $0.59 per unit; (2) reduce the selling price per unit by $0.25, and (3) increase fixed selling expenses by $40,000. Paul cited an old marketing report that stated that sales would increase by 60%. If these changes were made, what would be the effect of the proposed changes in Paul's plan on the breakeven point in dollars and the profits of the partnership? D.Which plan should be accepted? Explain, argue and justify your answer.

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