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NOVA Knights just completed the $2022$ fiscal period $($January $1-$December $31)$ and through management analysis and review of the income statement the following information was determined: $1.$ Sales Revenue of based on sales of $225,500$ units is $1578,500.$ Cost of Goods Sold totaled $1014,750$ and COGS $($Cost of Goods Sold$)$ are $70\%$ variable. Selling Expenses totaled $410,000$ and $45\%$ are variable. Administrative Expenses totaled $189,300$ and $40\%$ of administrative expenses are variable.Rounding and Calculation Instructions $-$ Round all costs per unit to $2$ decimals $-$ FINAL break$-$even answers to the unit and dollar $($no decimals$).-$ DO NOT Round the contribution margin ratio: $-$ You will NOT maintain the same percentages of variable vs$.$ fixed costs in each of the proposed plans. Using the information above prepare, in good form, a GAAP $($accrual basis$)$ income statement, determine net income $($loss$)$ and compute the break$-$even point in total sales dollars and in units. Part $2.$ PLANA $-$ Lorna has proposed a plan to improve its profitability. Lorna feels that the quality of the final product could be substantially improved by spending more per unit on higher quality raw materials. The selling price per unit could be increased to $$7\mathrm{.}35.$ Lorna projects that sales volume will increase by $22\%.$ She feels the quality of the final product could be improved by spending $$0\mathrm{.}23$ more per unit on higher quality. Compute net income under Lorna's proposal and the break$-$even point in units and sales dollars. $($DO NOT Round the contribution margin ratio.$)$ PLAN B $-$ Anh was a sales and marketing major in college. Anh believes sales volume can be increased by using an intensive online advertising and social media promotional campaign. She proposed the following plan as an alternative to Lorna's: $(1)$ improve sales incentives by increasing sales commission for each sale, this will increase the following variable costs: cost of goods sold to $$3\mathrm{.}16$ per unit, selling expenses to $0\mathrm{.}85$ per unit, administrative expenses to $0\mathrm{.}55$ per units, $(2)$ increase the selling price per unit by $0\mathrm{.}57,$ and $(3)$ increase fixed selling expenses by $45840.$ Anh based her recommendations on a marketing research report that suggested that sales volume would increase by $21\%$ if these changes were made. Compute net income under Anh's proposal and the break$-$even point in unit and sales dollars. $($DO NOT Round the contribution margin ratio$)$ Part $3.$ Which plan do you believe should be accepted and why?

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