Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of s186 per unit during the current year. Its income statement is as follows: The division of costs between. varablen and fored is as follows: Management is considering a plant expansion program for the folfowing year that wil permit an increase of $13,020,000 in vearty saies. The expansion will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costi. 1. Determine the totat variable costs and the total fixed costs for the current year. Total variable costs 4 Total foxed costs 5 2. Determine (a) the unit variable cost and (b) the unit contrbution margin for the current yeac. Unit variable costs Unit contribution maryin 3. Compute the brnak-even sales (units) for the current year. 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 necessany under the proposed propram to realize the 561,000,000 or operating income that was eamed in the current veat. uniss 6. Determine the maximum ogerating income possible with the expanded plant. 7. If the proposal is accepted and saies remain at the current level, what will the operating income or loss be for the following year? 8. Based on the data given, wauld you recommend accepting the proposal? a. In tavor of the proposai because of the reduction in treakeeven 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 increale in break-even point. a. Reject the proposal becouse if futurt sales remain at the current level, the income from operations wis increate. E. Reject the propesal because the sales necessary to maintain the current income from operations would be below the current year sale