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

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Break-Even Sales Under Present and Proposed Conditions
Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $189 per unit during the current year. Its income statement is as follows:
Required:
Determine the total variable costs and the total fixed costs for the current year.
Total variable costs
x
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
units
Determine the maximum operating income possible with the expanded plant.
$
If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
$
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 operations would be below the current year sales,
Choose the correct answer.
b v
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