Reference no: EM132995791

Problem - Matthew 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 Sarah's: (1) increase variable selling expenses to $0.575 per unit, (2) lower the selling price per unit by $0.25, and (3) increase fixed selling expenses by $63,240. Matthew quoted an old marketing research report that said that sales volume would increase by 60% if these changes were made. Compute the net income under Matthew's proposal and the break-even point in dollars.