Break$-$Even Sales Under Present and Proposed Conditions

Portmann Company, operating at full capacity, sold $1,000,000$ units at a price of $$186$ per unit during the current year. Its income statement

is as follows:

Expenses:

The division of costs between variable and fixed is as follows:

Management is considering a plant expansion program for the following year that will permit an increase of $$11,160,000$ in yearly sales. The

expansion will increase fixed costs by $$4,000,000$ 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 $,!$

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

Determine the amount of sales $($units$)$ that would be necessary under the proposed program to realize the $$61,000,000$ of operating

income that was earned in the current year.

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?

$