Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (102,000,000) Gross profit $85,000,000 Expenses: Selling expenses $16,000,000 Administrative expenses 7,200,000 Total expenses (23,200,000) Operating income $61,800,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,090,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. 75% 4. Compute the break-even sales (units) under the proposed program for the following year. 86,000 X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $61,800,000 of operating income that was earned in the current year. 61,800,000 X units 6. Determine the maximum operating income possible with the expanded plant. 41,200,000 x $ 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? 58,800,000 x Income S