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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 99,700 units at a price of $69 per unit during
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 99,700 units at a price of $69 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold Gross profit $6,879,300 2,438,000 $4,441,300 Expenses: Selling expenses $1,219,000 Administrative expenses 736,000 Total expenses 1,955,000 $2,486,300 Income from operations The division of costs between variable and fixed is as follows: 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 $552,000 in yearly sales. The expansion will increase fixed costs by $73,600, but will not affect the relationship between sales and variable costs.
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