Break$-$Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold $101,400$ units at a price of $$135$ per unit during the current year. Its income statement is as follows:

The division of costs between variable and fixed is as follows

Required:

Determine the total variable costs and the total fixed costs for the current year.

Total variable costs

Total fixed costs

$!$

$$

Determine $($a$)$ the unit variable cost and $($b$)$ the unit contribution margin for the current year.

Unit variable cost

$

$

Unit contribution margin

$

$

Compute the break$-$even sales $($units$)$ for the current year.

$|$ units

Compute the break$-$even sales $($units$)$ under the proposed program for the following year.

$|$ units

year.

$]$ units

$$162,000,$ but will not affect the relationship between sales and variable costs.

$

If the nronnsal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?

$

Income $$

Based on the data given, would you recommend accepting the proposal?

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