Question
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 167,200 units at a price of $111 per unit during the
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 167,200 units at a price of $111 per unit during the current year. Its income statement is as follows: Sales $18,559,200 Cost of goods sold 6,586,000 Gross profit $11,973,200 Expenses: Selling expenses $3,293,000 Administrative expenses 1,961,000 Total expenses 5,254,000 Income from operations $6,719,200 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 $1,665,000 in yearly sales. The expansion will increase fixed costs by $222,000, 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 $ NEED THIS - please show work
I have the total fixed cost so I do not need that.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $ NEED THIS - please show work
Unit contribution margin $ NEED THIS - please show work
3. Compute the break-even sales (units) for the current year.
NEED THIS - please show work
4. Compute the break-even sales (units) under the proposed program for the following year.
NEED THIS - please show work
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $6,719,200 of income from operations that was earned in the current year. units
NEED THIS - please show work
6. Determine the maximum income from operations possible with the expanded plant.
NEED THIS - please show work
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