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Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during

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Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows: The division of costs between variable and fixed is as follows: Management is considering a plant expansion program for the following year that wal permit an increase of 5900,000 in yearly sales. The expansion wal increase fxed costs by $212,500 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total fixed costs and the total variable costs for the current year. 1. Determine the total fixed costs and the total variable costs for the current vear. 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. 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 5. Determine the amount of sales (units) that would $ necessary under the proposed program to realize the $692,500 of cperating income that was earned in the current vear. units 6. Determine the maximum operating income possible with the expanded plant. 1 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 1 8. Basod on the date 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 possibaty of increasing operating income. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal becouse if future soles remain at the current level, the operating income will increase. e. Reject the proposal because the siles necessary to maintain the current operating income would be below the current year sales. Choose the correct

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