Determine the amount of sales (units) that would be necessary underBreak-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 122,850 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows:

Sales$6,265,350Cost of goods sold3,094,000Gross profit$3,171,350Expenses:Selling expenses$1,547,000Administrative expenses1,547,000Total expenses3,094,000Income from operations$77,350

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

VariableFixedCost of goods sold70%30%Selling expenses75%25%Administrative expenses50%50%

Management is considering a plant expansion program that will permit an increase of $561,000 in yearly sales. The expansion will increase fixed costs by $56,100, 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 $77,350 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.