Question
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $57 per unit during
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 143,000 units at a price of $57 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $8,151,000 2,888,000 Gross profit $5,263,000 Expenses: Selling expenses $1,444,000 Administrative expenses 874,000 Total expenses 2,318,000 Income from operations The division of costs between variable and fixed is as follows: $2,945,000 Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% 30% 70% Administrative expenses Management is considering a plant expansion program for the following year that will permit an increase of $741,000 in yearly sales. The expansion will increase fixed costs by $98,600, 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.
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