Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its income statement is as follows: Sales $186,000,000 Cost of goods sold (100,000,000) Gross profit $86,000,000 Expenses: Selling expenses $ 16,000,000 Administrative expenses 8,000,000 Total expenses (24,000,000) Operating income $62,000,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $9,300,000 in yearly sales. The expansion will increase fixed costs by $4,500,000 but will not affect the relationship between sales and variable costs. 6. Determine the maximum operating income possible with the expanded plant. S 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? Income UE