Break-even soles under present and proposed condsions Portmann Company, operating at fult capacity, sold 1,000,000 units at a price of $187 per unit during the current year, fts incorne statement is as follows: The division of costs between variable and fored is as follows: Manogement is convidering a plant expansion program for the following vear that will permit an increase of $11,220,000 in vearty wles. The expantian will increase fived costs by $4,500,000 but will not affect the relationship between sales and variable costs: 1. Determine the fotal variable costs and the fotal fored costs for the current year: Total variable costs 1 Total fixed costs 1 2. Oetermine (a) the unit varieble cost and (b) the unit contribution margin for the current veas: Unit variable cost 5 Unt centribution margin 5 3. Combute the bresk-even sales (unita) for the curent veat units 4. Compute the frrmicten sales (units) under the broposed program fer the folosing vear. units evient vear unis 6. Determe the marimum operation income posubie wit the expanded plant. 7. If the proposal as accepted and sales reman at the current level, shat wil the operating income or loss be for the foliowing veas? 1 8. Based on the deta given, wolld you recommend accesting the proposar? a. In fovor of the proposat pecause of the reduction in breakeven point. a. In favor of the proposal because of the possolity of increasing income from eperations. c. In toror of the proposal because of the increase in break-even poins. d. Reject the proposal bechuse if future sales remain at the current ievel, the income from operanons will increase 6. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year saies: Choose the correct