10:14 ..156 ACG2071- Test #2- Professor Lionel Suarez- Summer 2021 (Part 1) Part 1 (50 Points) Miami Corporation was operating at full capacity: they sold 500.000 units at $94 cach during the current year. Their income statement is as follows: Sales S47,000,000 Cost of Goods Sold $25,000,000 Gross Profit $22,000,000 Selling Expenses $4,000,000 Admin Expenses $3,000,000 Total Expenses $7,000,000 Income from Operations SI5,00.000 The division of costs between variable and fixed is as follows: Variable P Emtamil TO Siling Piepen Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total variable costs and the total fixed costs for the current year. 2. Determine (A) the unit variable cost and (B) the unit contribution margin for the current year 3. Compute the break-even sales (units) for the current year. 4. Compute the break-even sales (units) under the proposed program for the following year. 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that was earned in the current year 6. Determine the maximum income from operations possible with the expanded plant. 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? Part 2 (50 Points) Based on the data given in the previous problem, would you recommend accepting the proposal? Explain...and please write as if someone important is reading it (grammar, etc.) mail-attachment.googleusercontent.com 10:14 ..156 ACG2071- Test #2- Professor Lionel Suarez- Summer 2021 (Part 1) Part 1 (50 Points) Miami Corporation was operating at full capacity: they sold 500.000 units at $94 cach during the current year. Their income statement is as follows: Sales S47,000,000 Cost of Goods Sold $25,000,000 Gross Profit $22,000,000 Selling Expenses $4,000,000 Admin Expenses $3,000,000 Total Expenses $7,000,000 Income from Operations SI5,00.000 The division of costs between variable and fixed is as follows: Variable P Emtamil TO Siling Piepen Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total variable costs and the total fixed costs for the current year. 2. Determine (A) the unit variable cost and (B) the unit contribution margin for the current year 3. Compute the break-even sales (units) for the current year. 4. Compute the break-even sales (units) under the proposed program for the following year. 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that was earned in the current year 6. Determine the maximum income from operations possible with the expanded plant. 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? Part 2 (50 Points) Based on the data given in the previous problem, would you recommend accepting the proposal? Explain...and please write as if someone important is reading it (grammar, etc.) mail-attachment.googleusercontent.com
