Question
Break-Even Sales Under Present and Proposed Conditions Show Me How Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $187
Break-Even Sales Under Present and Proposed Conditions Show Me How 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 Cost of goods sold $187,000,000 (101,000,000) $86,000,000 Gross profit Expenses: Selling expenses $14,000,000 Administrative expenses 11,600,000 Total expenses Operating income (25,600,000) $60,400,000 >The division of costs between variable and fixed is as follows: Cost of goods sold Selling expenses Variable Fixed 70% 30% 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 $3,500,000 but will not affect the relationship between sales and variable costs. Required:
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