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 99,900 units at a price of $96 per unit during the current year. Its income statement for the current year is as follows:

Sales$9,590,400

Cost of goods sold4,736,000

Gross profit$4,854,400

Expenses:

Selling expenses $2,368,000

Administrative expenses 2,368,000

Total expenses4,736,000

Income from operations$118,400

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 $864,000 in yearly sales. The expansion will increase fixed costs by $86,400, but will not affect the relationship between sales andvariable costs.

Required:

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 $118,400 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.

$_________