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The condensed income statement for the Crane and Paul partnership for 2020 is as follows.

Sales (240,000 units)


$1,200,000
Cost of goods sold


768,000
Gross profit


432,000
Operating expenses




Selling
$280,000


Administrative
156,000






436,000
Net loss


$(4,000)


A cost behavior analysis indicates that 75% of the cost of goods sold are variable, 42% of the selling expenses are variable, and 40% of the administrative expenses are variable.


Crane has proposed a plan to get the partnership “out of the red” and improve its profitability. She feels that the quality of the product could be substantially improved by spending $0.25 more per unit on better raw materials. The selling price per unit could be increased to only $5.25 because of competitive pressures. Crane estimates that sales volume will increase by 25%. Compute the net income under Crane's proposal and the break-even point in dollars. 

What is the net income and break-even point


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