Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its Income statement is as follows: Sales $185,000,000 Cost of goods sold (102,000,000) Gross profit $84.000.000 Expenses: Selling expenses $14,000,000 Administrative expenses 3,200.000 Total expenses (22.200,000) Operating Income $61,800,000 The division of costs between able and feeds as follows Variable Fixed Cast of goods sold 704 30 Selling expenses 7594 255 Administrative 50% 50 Dentes Management is considering a plant expansion program for the following year that will be an increase of $12.020,000 in early sales. The expansion was increased costs by .000.000 but will not affect the relationshib been sales and variable cost Required: 1. Batmine the total cost the two other expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $13,020,000 in yearly sales. The expansion will increasefired costs by $4,000,000 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. Total variable costs Total fixed 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. Comoute the break-even sales (units) for the current year. units 4. Compute the break-even sales (units) under the propound program for the following year units 5. Determine the amount of sales (unite that would be necessary under the rooted program to realize the 561.800,000 of operating income that was earned in the currente 6. Determine the main operating income possible with the wonded blant 1. If the proponit accepted and sales remain at the current level what will the operating income or be for the 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 $61,800,000 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-event 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 Relect the proposal because the sales necessary to maintain the current income from operations would be below the current wear sales Choose the correct
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/669e4e4a5db27_762669e4e4a05def.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/669e4e4b0d043_762669e4e4aa8a6d.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/669e4e4baa628_763669e4e4b498bd.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started