Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 178,600 units at o price of $48 per unit during the current year, fts income statement is as follows: The division of cosis between variable and fixed is as follows: Management is considering a plant expansion progiram for the following year that will permit an increase of $768,000 in yearly sales, The expansion will increas fixed costs by $102,400, but will not affect the relationship between sales and yariable costs. ftequired: 1. Determine the total variable costs and the total fixed costs for the current year, Total variable cost 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. Combute the break even sales (units) for the current year. x units 4. Compute the break-even sales (units) under the proposed program for the following year. X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realue the $3,100,800 of income from operations that was earned in the current year. x units 6. Determine the maximum income from operations possible with the expanded plant. x 7. If the proposal is occepted and sales remain ot the current level, What will the income or loss from operations be for the following year? 3 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. Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 178,600 units at o price of $48 per unit during the current year, fts income statement is as follows: The division of cosis between variable and fixed is as follows: Management is considering a plant expansion progiram for the following year that will permit an increase of $768,000 in yearly sales, The expansion will increas fixed costs by $102,400, but will not affect the relationship between sales and yariable costs. ftequired: 1. Determine the total variable costs and the total fixed costs for the current year, Total variable cost 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. Combute the break even sales (units) for the current year. x units 4. Compute the break-even sales (units) under the proposed program for the following year. X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realue the $3,100,800 of income from operations that was earned in the current year. x units 6. Determine the maximum income from operations possible with the expanded plant. x 7. If the proposal is occepted and sales remain ot the current level, What will the income or loss from operations be for the following year? 3 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
