1. Break-Even Sales Under Present and Proposed Conditions

   Darby Company, operating at full capacity, sold 174,900 units at a price of $90 per unit during the current year. Its income statement is as follows:

   Sales			$15,741,000
   Cost of goods sold			5,580,000
   Gross profit			$10,161,000
   Expenses:
   Selling expenses	$2,790,000
   Administrative expenses	1,680,000
   Total expenses			4,470,000
   Income from operations			$5,691,000

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

   	Variable		Fixed
   Cost of goods sold	60%		40%
   Selling expenses	50%		50%
   Administrative expenses	30%		70%

   Management is considering a plant expansion program for the following year that will permit an increase of $1,440,000 in yearly sales. The expansion will increase fixed costs by $192,000, but will not affect the relationship between sales and variable 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 break-even sales (units) for the current year. units

   4. Compute the break-even sales (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 realize the $5,691,000 of income from operations that was earned in the current year. units

   6. Determine the maximum income from operations possible with the expanded plant. $

   7. 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? $ Income

2.

Contribution Margin and Contribution Margin Ratio

For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales	$34,600
Food and packaging	$10,406
Payroll	8,700
Occupancy (rent, depreciation, etc.)	9,454
General, selling, and administrative expenses	5,000
	$33,560
Income from operations	$1,040

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) $ million

b. What is Wicker Company's contribution margin ratio? Round to one decimal place. %

c. How much would income from operations increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. $ million