Break-Even Sales Under Present and Proposed Conditions Portmann Company operating at full capacity told 1,000,000 units at a price of 5187 per unit during the current year. It income statement is as follows: Sales $187,000,000 Cost of goods sold (101,000,000) Gross profit 536,000,000 Expenses Selling expenses 515.000.000 Administrative expenset 10,100,000 Total expenses (25,100,000) Operating income $60,900,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 30% Selling expenses 75% 25 Administrative 50 50% expenses Management is considering a plant expansion program for the following year that will permitan increase of $13,090,000 in yearly sales. The expansion will increased costs by 32,500,000 lut wilt affect the relationship between sales and variable costs 704 Required: 1. Determine the total variable costs and the total fixed costs for the current year Total variable costs 87,000,000 Total fixed costs 39,100,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year Unit variable cost 39,500,00 Unit contribution margin 3. Compute the break even sales (units) for the current year units 4. Compute the break-even sales (units) under the proposed program for the following year units 5. Determine the amount of sales (units) that would be necessary under the proposed program to raise the $60,900,000 of operating frame that was arred in the current units 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 or low be for the following year 8. Based on the data given, would you 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 income from operations c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because ifuture sales remain at the current level, the income from operations will increase e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales Choose the correct