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Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 118,500 units at a price of $54 per unit during
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 118,500 units at a price of $54 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold $6,399,000 2,268,000 Gross profit Expenses: $4,131,000 Selling expenses $1,134,000 Administrative expenses 684,000 Total expenses 1,818,000 $2,313,000 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% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $486,000 in yearly sales. The expansion will increase fixed costs by $64,800, but will not affect the relationship between sales and variable costs. Required:
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