Company A is operating at full capacity, sold 45,600 units during the current year. Its income...

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Accounting

Company A is operating at full capacity, sold 45,600 unitsduring the current year. Its income statement is as follows:
Sales
$5,654,400
Cost of goods sold
3,618,816
Gross profit
$2,035,584
Expenses:
Selling expenses
$984,000
Administrative expenses
430,000
Total expenses
1,414,000
Income from operations
$ 621,584
The division of costs between variable and fixed is as follows:(round to nearest dollar)
Variable
Fixed
Cost of goods sold
70%
30%
Selling expenses
20%
80%
Administrative expenses
10%
90%
Management is planning to increase the unit sales price by $3each, no change to the variable cost, but adding additional fixedcost of $25,000.
a. Determine the total variable costs andb. the total fixed costs for the currentyear.
a. Compute the break-even sales units andb. dollar sales for the current year. (round tonearest unit/dollar)
a. Compute the break-even sales units andb. dollar sales under the proposed program for thefollowing year. (round to nearest unit/dollar)
How many units would have to be sold, under the proposedprogram, to generate income from operations of $965,500 (round tonearest unit).

Answer & Explanation Solved by verified expert

4.4 Ratings (867 Votes)

1 The division of costs between variable and fixed is as follows Variable Fixed Cost of goods sold 70 3618816 x 70 2533171 30 3618816 x 30 1085645 Selling expenses 20 984000 x 20 196800 80 984000 x 80 787200 Administrative expenses 10 430000 x 10 43000 90 430000 x 90 387000 Total See Answer

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Sales		$5,654,400
Cost of goods sold		3,618,816
Gross profit		$2,035,584
Expenses:
Selling expenses	$984,000
Administrative expenses	430,000
Total expenses		1,414,000
Income from operations		$ 621,584

	Variable	Fixed
Cost of goods sold	70%	30%
Selling expenses	20%	80%
Administrative expenses	10%	90%