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Break-Even Sales Under Present and Proposed Conditions Battonkill Company, operating at full capacity, sold 101,400 units at a price of $123 per unit during the
Break-Even Sales Under Present and Proposed Conditions Battonkill Company, operating at full capacity, sold 101,400 units at a price of $123 per unit during the current year. Its income statement for the current year is as follows: Sales Cost of goods sold Gross profit Expenses: $12,472,200 4,428,000 $8,044,200 Selling expenses $2,214,000 Administrative expenses 1,312,000 Total expenses 3,526,000 Income from operations $4,518,200 The division of costs between fixed and variable is as follows: Fixed Variable 40% Cost of goods sold Selling expenses Administrative expenses Management is considering a plant expansion program that will permit an increase of $984,000 in yearly sales. The expansion will increase fixed costs by $131,200, but will not affect the relationship between sales and variable costs. 60% 50% 50% 7 0% 30%
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