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Companyoperating at capacity , sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales
Companyoperating at capacity , sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: Sales $ 190,000,000 of goods sold (98000000)/592000000 Gross profit Expenses Selling expenses $16,000,000 Administrative expenses 18,800,000 Total expenses (34,800,000) Operating income $57,200,000 The division of costs between variable and is as follows: Variable Fixed Cost of goods sold 70%30% Selling expenses 75% 25% Administrative 50 % expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion increase fixed costs by 4,000,000 but will not affect the relationship between sales and variable costs Required Maximum operating income possible with expanded plant If the proposal is accepted and sales remain at current level income be
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