BreakEven 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 current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (98,000,000) Gross profit $89,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 15,800,000 Total expenses (29,800,000) Operating income $59,200,000 ) The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $9,350,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 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. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 68.60 X Total fixed costs $ 29,400,000 X 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 68.60 X Unit contribution margin 3. Compute the break-even sales (units) for the current year. 248,912 X 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 $59,200,000 of operating income that was earned in the current year. units 6. Determine the maximum operating income possible with the expanded plant. 196,350,000 X 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