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 cument years income statement is a f Sales Cost of goods sold $187,000,000 (99,000,000) Gross profit Expenses Selling expenses $14,000,000 Administrative expenses 14,400,000 Tex Operating Income $88,000,000 (28,400,000) $39,000,000 The division of costs between variable and fixed is as follows Cost of goods sold Selling expenses Administrative expenses Variable Fixed 70% 30% 25% 29% 50% 50% Management is considering a plant expansion program for the following year that will permitan 30,000 tys. They do by 100,000 1 variable costs Required 1. Determine the total variable costs and the total fired costs for the current wat Tatal variable costs d Total fixed costs 2. Determine (a) the unit variable cost and (b) the bitcoin margin for the current yea Unit variable cost Unit contribution margin 3. Compute the break-eves sales units) for the current year units 4. Compute the break-even sales (units) under the proposed program for the fallwing yea 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 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 realize the $59,600,000 of operating income that was earned in the current year, 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 loss 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 if future 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 answer.