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Break-Even Sales Under Present and Proposed Condivons Darby Company, operating at full capacty, sold 500,000 units at a price of 504 per unit during the

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Break-Even Sales Under Present and Proposed Condivons Darby Company, operating at full capacty, sold 500,000 units at a price of 504 per unit during the current year. tes income statement is as folions: The division of costs between varlable and fixed is as follows: Management is considering a plant expansion program foc the following vear that will permit an increase of 17,760,000 in yearty sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costa. Required: 1. Determine the total varable costs and the total fixed costs for the current yeat Management is considering a plant expansion program for the following year that will permit an increase of 53,760,000 in yearhy sales, The expansioh wit incresse fixed costs by $1,800,000 but will not affect the reiationship between sales and variable costs. Required 1. Determine the total variabie costs and the totat fixed costs for the current year. 2. Determine (a) the unit variable cost and (b) the unit contrbition murgin for the curtent vear, 3. Compute the break-even sates (units) for the current year. x units 4. Compute the break-even sales (units) under the proposed program foe the following year. x units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the s15, 000,000 of income tham operabons that was earned in the current year. x units 6. Determine the maximum income from operations possible with the expanded plant: x 7. if the proposal is accepted and sales remain at the current ievel, what will the income ar loss fiom operationa be for the foliowiog. Vear? x 8. Based on the data given, would you recommend accepting the propoial? a. In favor of the proposal because of the reduction in break-even point. a. in tavor of the proposat because of the recuctan in breakeve poing income from operations

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