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 $189,000,000 Cost of goods sold (99,000,000) Gross profit $90,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 18,400,000 Total expenses (32,400,000) Operating income $57,600,000 The division of costs between variable and fixed is as follows: Fixed Variable 70% 309 7596 25% Cost of goods sold Selling expenses Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $9.450,000 years. The increased costs by $4,500,000 but will not affect the relationship between sales and variable costs Required: Previous 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 89,000,000 Total fixed costs 42,400,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year Unit variable cost 89 Unit contribution margin 100 3. Compute the break even sales (units) for the current year 424,000 units 4. Compute the break-even sales (units) under the proposed programs for the following year. 454,000 X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $57,600,000 of operating income that was earned in the current year 1,030,000 X units 6. Determine the maximum operating income possible with the expanded plant 65,160,000 X 7. If the proposal is accepted and sales remain at the current level, what will the operating income or be for the foowing year 54,600,000 X Income 8. Based on the data given, would you recommend accepting the proposal a in favor of the rules of the resturinn in heaven sint Previous >