Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating at full capacity, sold 107,100 units at a price of $102 per unit during
Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating at full capacity, sold 107,100 units at a price of $102 per unit during 2015. Its income stateme follows: Sales Cost of goods sold $10,924,200 (3,876,000) $7,048,200 Gross profit Expenses: Selling expenses $1,938,000 Administrative expenses 1,156,000 Total expenses (3,094,000) Income from operations $3,954,200 The division of costs between fixed and variable is as follows: Fixed Variable Cost of good sold 40% 60% Selling expenses 50% 50% Administrative expenses 70% 30% Instructions: 1. Determine for 2015 the total fixed costs and the total variable costs. Total fixed costs Total variable costs 2. Determine for 2015 (a) the unit variable cost and (b) the unit contribution margin. a. Unit variable cost b. Unit contribution margin 3. Compute the break-even sales (units) for 20Y5. per unit per unit units 4. Compute the break-even sales (units) under the proposed program. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $3,954,200 of income from operations that was earned in 2015. units 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the 20Y5 level, what will be the operating income or loss for 20Y6?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started