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 86,400 units at a price of $57 per unit during the current year. Its income statement for the current year is as follows:

Sales$4,924,800

Cost of goods sold2,432,000

Gross profit$2,492,800

Expenses:Selling expenses$1,216,000

Administrative expenses 1,216,000

Total expenses2,432,000

Income from operations$60,800

The division of costs between fixed and variable is as follows:

Variable Fixed

Cost of goods sold 70% 30%

Selling expenses 75% 25%

Administrative expenses 50% 50%

Management is considering a plant expansion program that will permit an increase of $456,000 in yearly sales. The expansion will increase fixed costs by $45,600, but will not affect the relationship between sales andvariable costs.

1.Determine the total variable costs and thetotal fixed costsfor the current year. Enter the final answers rounded to the nearest dollar.

Total variable costs $_________

Total fixed costs $________

2.Determine (a) the unit variable cost and (b) theunit contribution marginfor the current year. Enter the final answers rounded to two decimal places.

Unit variable cost $__________

Unit contribution margin $________

3.Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. _________units

4.Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. __________units

5.Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,800 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. ________units

6.Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.

$_________

7.If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar. $____________