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Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity,
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 98,550 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows: Sales Cost of goods sold $5,026,050 2,482,000 Gross profit Expenses: Selling expenses $1,241,000 Administrative expenses 1,241,000 Total expenses $2,544,050 Income from operations 2,482,000 $62,050 The division of costs between fixed and variable is as follows: Variable Fixed: Cost of goods sold 70% 30% Selling expenses 75% 25% 50% 50% 4 Administrative expenses Management is considering a plant expansion program that will permit an increase of 5408,000 in yearly sales. The expansion will increase fixed costs by $40,800, but will not affect the relationship between sales and variable costs. Required:
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