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 current year. Its income statement is as follows: Sales $187,000,000 Cost of goods sold (102,000,000) Gross profit $85,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 8,700,000 Total expenses (23,700,000) Operating income $61,300,000 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 $13,090,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs.

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $61,300,000 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