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Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 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 $190 per unit during the current year. Its income statement is as follows: Sales Cost of goods sold Gross profit Expenses: Selling expenses Administrative expenses Total expenses $16,000,000 17,400,000 Cost of goods sold Selling expenses $190,000,000 (99,000,000) $91,000,000 (33,400,000) Operating income $57,600,000 The division of costs between variable and fixed is as follows: Variable 70% 75% 50% Fixed 30% 25% 50% Administrative expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,400,000 in yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and variable costs. Required:
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