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The condensed income statement for the Peri and Paul partnership for 2017 is as follows:

A cost behavior analysis indicates that 60% of the cost of goods sold are variable, 41% of the selling expenses are variable, and 44% of the administrative expenses are variable. (Round to nearest unit, dollar, and percentage, where necessary. Use the CVP income statement format in computing profits.)

QUESTION: 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 Peris: (1) increase variable selling expenses to $0.64 per unit, (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $40,000. Paul quoted an old marketing research report that said that sales volume would increase by 56% if these changes were made. What effect would Pauls plan have on the profits and the break-even point in dollars of the partnership?

My answers: $1,562,051 for the Break-even point in dollars (which is correct), but I keep getting $75,952 for the profit (which is incorrect according to the program). Any ideas what I may be doing wrong?

PERI AND PAUL COMPANY Income Statement For the Year Ended December 31, 2017 $1,200,000 800,000 400,000 Sales (240,000 units) Cost of goods sold Gross profit Operating expenses Selling Administrative $280,000 150,000 430,000 ,000 Net loss $(30,000)

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