1. BE 05-02 ALGO 2. BE 05-03 ALGO Determine the amount of sales (units that would be necessary Break Even Sales Under Present and Proposed Conditions Darty Company operating full capacity. Sold 400 units price of 10 per the current years income statement for the current yesas 3. EX.05-01 4. PR 05-02A ALGO Sales Cost of goods sold Gross profit Expenses Selling expenses 4.480,000 34,592,000 $2,240,000 2.240,000 Administrative expenses Total expenses 4,450,000 Income from operations $112.000 The division of costs between foved and variable is as follows: Variable Fixed Cost of goods sold 70% 30% 25% Selling expenses 75% Administrative expenses 50% 50% Management is considering a plant expansion program that will perm an increase of $735,000 in yearly sales. The expansion will increase foed costs by $73,500, but will not affect the relationship between sales and variable costs. con increase of sales. The expansion w increase foxed costs by 573,500, but will Slect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar. Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places Unit variable cost Unit contribution margin 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number units 4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed rent variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places Unit variable cost Unit contribution margin 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units 4. Compute the break-even sales (units) under the proposed program for the following year, Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $112,000 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. 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? Enter the final answer rounded to the nearest dollar. 8. Based on the data given, would you recommend accepting the proposal? a. In favor of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibility of increasing income from operations. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. e. Reject the proposal because the sales necessary to maintain the current income from
