Michael 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 Barbara's: (1) increase unit variable selling expenses to $0.530, (2) lower the unit selling price by $0.30, and (3) increase fixed selling expenses by $49,000. Michael quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Compute net income under Michael's proposal and the break-even point in sales dollars. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 2,520) Net income Break-even point in sales $ Amounts

Michael 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 Barbara's: (1) increase unit variable selling expenses to $0.530, (2) lower the unit selling price by $0.30, and (3) increase fixed selling expenses by $49,000. Michael quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Compute net income under Michael's proposal and the break-even point in sales dollars. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 2,520) Net income Break-even point in sales $ Amounts

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...

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Question

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Barbara and Michael Company
Income Statement
For the Year Ended December 31, 2025
Sales (300,000 units)
$1,500,000
Cost of goods sold
1,000,000
Gross profit
500,000
Operating expenses
Selling
Administrative
Net loss
$350,000
169,600
519,600
$(19,600)
A cost behavior analysis indicates that 75% of the cost of goods sold are variable and 42% of the selling expenses are variable.
Administrative expenses are $91,600 fixed.

Michael 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 Barbara's: (1) increase unit variable selling
expenses to $0.530, (2) lower the unit selling price by $0.30, and (3) increase fixed selling expenses by $49,000. Michael quoted an
old marketing research report that said that sales volume would increase by 60% if these changes were made.
Compute net income under Michael's proposal and the break-even point in sales dollars. (Round intermediate calculations to 2
decimal places, e.g. 15.25 and final answers to O decimal places, e.g. 2,520.)
Net income
Break-even point in sales
Amounts

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