The condensed income statement for the Jerry partnership for 2008 is as follows:

Jerry Company

Income statement

For the year ended December 31, 2008

A cost behavior analysis indicates that 75% of the costs of goods sold are variable, 50% of the selling expenses are variable, and 25% of the administrative expenses are variable.
(a) Compute the break-even point in total sales dollars and in units for 2008.
(b) Jerry has marketing major in college. He believes that only intensive advertising can increase sales volume and promotional campaigns he therefore proposed the following plan
(1) Increase variable selling expenses by to $0.79 per unit
(2) Lower the selling price per unit by $.30
(3) Increase fixed selling expenses by $35,000. Jerry quotes an old marketing research report that said that sales volume would increase by 60% if these changes were made. What effect would Jerry's plan have on the profits and the break-even point in dollars of thepartnership?

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Particulars Amount Amount S 1,200,000.00 S 800,000.00 S 400,000.00 sales(200,000 units) Cost of goods sold Gross profit Operating expenses Selling Adminstrative Net loss S 280,000.00 S 160,000.00 S 440,000.00 Mha S (40,000.00)