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 cansidering a plant expansion program for the following year that will permit an increase of $900,000 in yearly sales. The expansion wil increase ficed conts by $212,500 but will not affect the relationship between sales and variabie costs. Required: 1. Determine the total fixed costs and the total variable costs for the current year Total variabie costs 1 Total fiked costs 1 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. 1. Determine the total fixed costs and the total variable costs for the current year: Total variable costs 5 Total foxed costs $ 2. Determine (b) the unit variable cost and (b) the unit contnbution margin for the current year: Unit variable cost 5 Unit contribution margins 3. Compute the break-even sales (units) for the current year. units 4. Compute the break-ben sales (units) under the proposed program for the following yeat. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the s692,500 of operating income that was earned in the current year. 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the current level, what will the operating income oe loss be for the following year? 8. Bassed on the data given, would vou 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 operating income. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because it future saies remain at the current level, the operating income will increase. e. Reject the proposal because the sales necessary to maintain the current operating income would be below the current year sales