Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity sold 124.200 units at a price of $54 per unit during the current year, its income statement is as Sales $6,706,000 Cost of goods sold 2.376.000 Cross profit $4.330.000 Expenses Selling expenses $1.188.000 Administrative expenses 720.000 Total expenses 1,909,000 Income from operations The division of costs between variable and food is as follows Variable Fixed Cost of goods sold Selling expenses 0% 50% 40% 50% 309 Management is considering a plant expansion program for the following year that will Hequired: 1. Determine the total variable costs and the total fixed costs for the current yea Total variable costs 2,235,600 Ch21HW Sp20 * Show Me How Calculator Print Item eBook 2,048,400 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 $ $ 18 36 3. Compute the break even sales (units) for the current year. 56,900 units 4. Compute the break even sales (units) under the proposed program for the following year 54,000 X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $2,422.800 of income from operations that was earned in the current year 170,100 X units 6. Determine the maximum income from operations possible with the expanded plant. 7. If the proposal is accepted and sales remain at the current level what will the income or loss from operations be for the following year? 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. b. In favor of the proposal because of the possibility of increasing income from operations, c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales Choose the correct answer. Ch21 5020 Break-even Sales and cost-volume-Profit Chart For the coming year Cleves Company anticipates it welling price of Required 1. Compute the anticipated break-even salles (units). variable cost of $44. and fed costs of $325.600. 2. Compute the sales (units) required to realize a target profit of $145,200 of 14.800 units within the relevant range from your chart, indicate whether each of the following levels would produce a profit a loss 3. Construct a cost volume profit chart, assuming maximum 395.200 5010,400 $631,200 5492.800 $309.200 4. Determine $
