Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 171,200 units at a price of $123 per unit during the current year. Its income statement is as follows: Sales $21,057,600 Cost of goods sold 7,462,000 Gross profit $13,595,600 Expenses: Selling expenses $3,731,000 Administrative expenses 2,255,000 Total expenses 5,986,000 Income from operations $7,609,600

Darby Campany, operating at full capacity, sold 171,200 units at a price of $123 per unit during the oumet year, Its incore staterent is as follows: The drisian of corts tetwean variable snd rixed is as trllows: Required: 1. Detarmine the tatal varsble ccsts and tha botsl fixed costs for tha current pear. TotalvaratlecostsTatalfixedcacts1 Lhit variable past Whit contrib.tien rargin 3. Comuste the bmak even sies (urits) for the ourmet your. urits 4. Compute the break-even seles (urits) tnder the proposed progren for the following year. units 4. Compute the break-even sales (units) under the proposed program for the following year. units 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? $ 8. Based on the data given, would you recommend accepting the proposal? a. In favor of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibility of increasing income from operations. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct