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Break - Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 1 0 1 , 4 0 0 units at

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Break
-
Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold
1
0
1
,
4
0
0
units at a price of $
1
3
5
per unit during the current year. Its income statement is as follows:
Sales $
1
3
,
6
8
9
,
0
0
0
Cost of goods sold
4
,
8
6
0
,
0
0
0
Gross profit $
8
,
8
2
9
,
0
0
0
Expenses:
Selling expenses $
2
,
4
3
0
,
0
0
0
Administrative expenses
1
,
4
4
0
,
0
0
0
Total expenses
3
,
8
7
0
,
0
0
0
Income from operations $
4
,
9
5
9
,
0
0
0
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold
6
0
%
4
0
%
Selling expenses
5
0
%
5
0
%
Administrative expenses
3
0
%
7
0
%
Management is considering a plant expansion program for the following year that will permit an increase of $
1
,
2
1
5
,
0
0
0
in yearly sales. The expansion will increase fixed costs by $
1
6
2
,
0
0
0
,
but will not affect the relationship between sales and variable costs. *
*
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*
*
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