Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating at full capacity, sold 171,200 units at a price of $129 per unit during 205. Its income statement for 2085 is as folows: The division of costs between fixed and variable is as follows: Mandgement is considering a plant expansion program that will permit an increase of $1,806,000(14,000 units at 5129 per unit) in yeart sales, The eupansign wa increase fived ebstr by $240,800, but will not affect the relaticnship between sales and variabie costs. Instructions: 1. Determine for 20y5 the total foxed costs and the total variable costs. Total fixed costs Total variable costs 2. Determine for 20y5 (a) the unit variable cost and (b) the unit contribstion margin- a. Unit variable cost per unit b. Unit contribution margin per unit 3. Compute the break-even sales (units) for 20rs: x units 4. Compute the braak-even saies (units) under the proposed propram. x units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realuc the $7,990,000 of eperating income bhat mas earned in 2995 x units 6. Determine the maximum operating income possible with the expanded plant. x 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the 20 . 5 level, what will be the operating income or bos for 20 rs? 8. Assuming a lack of market research, disadvantages for expanding the plant include all of the following except: a. The break-even point increases. Break-Even Sales Under Present and Proposed Conditions Kearney Company, operating at full capacity, sold 171,200 units at a price of $129 per unit during 205. Its income statement for 2085 is as folows: The division of costs between fixed and variable is as follows: Mandgement is considering a plant expansion program that will permit an increase of $1,806,000(14,000 units at 5129 per unit) in yeart sales, The eupansign wa increase fived ebstr by $240,800, but will not affect the relaticnship between sales and variabie costs. Instructions: 1. Determine for 20y5 the total foxed costs and the total variable costs. Total fixed costs Total variable costs 2. Determine for 20y5 (a) the unit variable cost and (b) the unit contribstion margin- a. Unit variable cost per unit b. Unit contribution margin per unit 3. Compute the break-even sales (units) for 20rs: x units 4. Compute the braak-even saies (units) under the proposed propram. x units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realuc the $7,990,000 of eperating income bhat mas earned in 2995 x units 6. Determine the maximum operating income possible with the expanded plant. x 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the 20 . 5 level, what will be the operating income or bos for 20 rs? 8. Assuming a lack of market research, disadvantages for expanding the plant include all of the following except: a. The break-even point increases
