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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 116,500 units at a price of $72 per unit during

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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 116,500 units at a price of $72 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $8,388,000 2,976,000 Gross profit $5,412,000 Expenses: Selling expenses $1,488,000 Administrative expenses 888,000 Total expenses 2,376,000 $3,036,000 Income from operations The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold Selling expenses 60% 40% 50% 50% 30% 70% Administrative expenses Management is considering a plant expansion program for the following year that will permit an increase of $648,000 in yearly sales. The expansion will increase fixed costs by $86,400, 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

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