Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $190,000,000 Cost of goods sold (99,000,000) Gross profit $91,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 18,900,000 Total expenses (33,900,000) Operating income $57,100,000 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 $13,300,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank 1 Total fixed costs $fill in the blank 2 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost $fill in the blank 3 Unit contribution margin $fill in the blank 4 3. Compute the break-even sales (units) for the current year. fill in the blank 5 units 4. Compute the break-even sales (units) under the proposed program for the following year. fill in the blank 6 units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $57,100,000 of operating income that was earned in the current year. fill in the blank 7 units 6. Determine the maximum operating income possible with the expanded plant. $fill in the blank 8 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? $fill in the blank 9 Income

Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: The division of costs between variable and fixed is as follows