GOLDEN WEST COLLEGEACCT 102 - PROJECTChapter 18 - Page 980: BYP18-3Sales (240,000 units) $ 1,200,000Cost of goods sold $ 800,000Gross profit $ 400,000Operating expensesSelling $ 280,000Administrative $ 150,000 $ 430,000Net loss $ (30,000)a) Compute the break-even point in total sales dollars and in units for 2014.b)c)d) Which plan should be accepted? Explain your answer.The condensed income statement for the Peri and Paul partnership for 2014 is as follows.A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% ofthe administrative expenses are variable.Instructions(Round to nearest unit, dollar, and percentage, where necessary. Use the CVP income statement format in computing profits.)Peri has proposed a plan to get the partnership “out of the red” and improve its profitability. She feels that the quality of the productcould be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increasedto only $5.25 because of competitive pressures. Peri estimates that sales volume will increase by 25%. What effect would Peri's planhave on the profits and the break-even point in dollars of the partnership? (Round the contribution margin ratio to two decimalplaces.)Paul was a marketing major in college. He believes that sales volume can be increased only by intensive advertising and promotionalcampaigns. He therefore proposed the following plan as an alternative to Peri'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 $40,000. Paul quoted an old marketing researchreport that said that sales volume would increase by 60% if these changes were made. What effect would Paul's plan have on theprofits and the break-even point in dollars of the partnership?PERI AND PAUL COMPANYIncome StatementFor the Year Ended December 31, 2014

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