Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $189 per unit during the current year Its income statement is as follows Sales Cost of goods sold Gross profit Selling expenses $15,000,000 Administrative experses 15,500,000 $189,000,000 (500,000,000) $9,000,000 Total expenses Operating income (30,500,000) $50,500,000 The division of costs between variable and fixed is as follows Variable Fixed Cast of goods sold 70% 30% Selling expenses 259 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year t will permit an increase of $12.230.000 in yearly tales. The expansion since t between sales and variable costs Required: 1. Determine the total variable costs and the total fed cts for the current year Total variable cost Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit ontbution margin for the current year Unit variable co Unit contribution margin 3 Compute the real-even sales (units) fer the current units 4 Compute the breakeven sales (units) under the proposed program for the following ye ffect the relationsh Required: 1. Determine the total variable costs and the total fixed costs for the current year, Total variable costs Total fund costs 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 salas (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 $58,500,000 of operating Income that was earned in the current year. 6. Determine the mesimum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the current level, what sell the operating income or loss be for the following year? B. 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. 4. Rajact the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer