Break Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. The income statement is as follows Sales $190,000,000 Cost of goods sold (99,000,000) Gross profit $91,000,000 Expenses Selling expenses $15,000,000 Administrative expenses 16,900,000 Total expenses (33.900.000) Operating income $57,100,000 The division of costs between variable and field is as follows: Variable Fixed Cost of goods sold 704 309 Selling expenses 75 254 Administrative 50% 504 expenses Management is considering a punt expansion program for the following year that we permitan increase of $9,500,000 in early as the expansion will increase fed couts by $4,500,000 but will not affect the relationship between sales and variable costs Required: 1. Determine the total variable costs and the total (xed costs for the current year. Total variable costs Total fixed costs Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year, Unit variable cost Unit contribution margin 3. Compute the treak-even sales (units) for the current year, units 4. Compute the break-even soles (units) under the proposed program for the following year. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to the $57,100,000 of operating income that was earned in the current year units 6. Determine the maximum operating income possible with the expanded plant 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following your 8. Based on the data given, would you recommend accepting the proposal In favor of the proposal because of the reduction in break-even point b. In favor of the proposal because of the possity of increasing income from operations c. In favor of the proposal because of the increase in break-even point d. Reject the proposal because it future sales remain at the current level, the income from operations will increase c. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales Previous Next Check My Work