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Break - Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 1 6 1 , 8 0 0 units at
BreakEven Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold units at a price of $ per unit during the current year. Its income statement is as follows: Sales $ Cost of goods sold Gross profit $ Expenses: Selling expenses $ Administrative expenses Total expenses Income from operations $ The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses Administrative expenses Management is considering a plant expansion program for the following year that will permit an increase of $ in yearly sales. The expansion will increase fixed costs by $ but will not affect the relationship between sales and variable costs. Required: Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank Total fixed costs $fill in the blank Determine a the unit variable cost and b the unit contribution margin for the current year. Unit variable cost $fill in the blank Unit contribution margin $fill in the blank Compute the breakeven sales units for the current year. fill in the blank units Compute the breakeven sales units under the proposed program for the following year. fill in the blank units Determine the amount of sales units that would be necessary under the proposed program to realize the $ of income from operations that was earned in the current year. fill in the blank units Determine the maximum income from operations possible with the expanded plant. $fill in the blank 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? $fill in the blank Income Based on the data given, would you recommend accepting the proposal? In favor of the proposal because of the reduction in breakeven point. In favor of the proposal because of the possibility of increasing income from operations. In favor of the proposal because of the increase in breakeven point. Reject the proposal because if future sales remain at the current level, the income from operations will increase. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer. b
BreakEven Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold units at a price of $ per unit during the current year. Its income statement is as follows:
Sales $
Cost of goods sold
Gross profit $
Expenses:
Selling expenses $
Administrative expenses
Total expenses
Income from operations $
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold
Selling expenses
Administrative expenses
Management is considering a plant expansion program for the following year that will permit an increase of $ in yearly sales. The expansion will increase fixed costs by $ but will not affect the relationship between sales and variable costs.
Required:
Determine the total variable costs and the total fixed costs for the current year.
Total variable costs $fill in the blank
Total fixed costs $fill in the blank
Determine a the unit variable cost and b the unit contribution margin for the current year.
Unit variable cost $fill in the blank
Unit contribution margin $fill in the blank
Compute the breakeven sales units for the current year.
fill in the blank
units
Compute the breakeven sales units under the proposed program for the following year.
fill in the blank
units
Determine the amount of sales units that would be necessary under the proposed program to realize the $ of income from operations that was earned in the current year.
fill in the blank
units
Determine the maximum income from operations possible with the expanded plant.
$fill in the blank
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?
$fill in the blank
Income
Based on the data given, would you recommend accepting the proposal?
In favor of the proposal because of the reduction in breakeven point.
In favor of the proposal because of the possibility of increasing income from operations.
In favor of the proposal because of the increase in breakeven point.
Reject the proposal because if future sales remain at the current level, the income from operations will increase.
Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.
Choose the correct answer.
b
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