90.2K

Verified Solution

Link Copied!

need number 6

Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 161,800 units at a price of $117 per unit during the current year. Its income statement is as follows: $18,930,600 6,708,000 $12,222,600 Sales Cost of goods sold Gross profit Expenses: Selling expenses $3,354,000 Administrative expenses 2,028,000 I Total expenses 5,382,000 $6,840,600 Income from operations The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 6096 40% Selling expenses 50% 50% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,755,000 in yearly sales, The expansion will increase fixed costs by $234,000, but will not affect the relationship between sales and variable costs, S 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 6,310,200 Total fixed costs 5,779,800 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year 39 Unit variable cost Unit contribution margin 5 78 3. Compute the break-even sales (units) for the current year. 74,100 units I 4. Compute the break-even sales (units) under the proposed program for the following year, 77,100 units S. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $6,840,600 of income from operations that was earned in the current year. 164,800 units 6. Determine the maximum income from operations possible with the expanded plant. 7,777,290 X 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? 6,606,600 V Income

Answer & Explanation Solved by verified expert

See Answer