Question
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
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 85,050 units at a price of $117 per unit during the current year. Its income statement for the current year is as follows:
Sales$9,950,850Cost of goods sold4,914,000Gross profit$5,036,850Expenses:Selling expenses$2,457,000Administrative expenses2,457,000Total expenses4,914,000Income from operations$122,850
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 $936,000 in yearly sales. The expansion will increase fixed costs by $93,600, but will not affect the relationship between sales andvariable costs.
Required:
1.Determine (a) the unit variable cost and (b) theunit contribution marginfor the current year. Enter the final answers rounded to two decimal places.
Unit variable cost$?
Unit contribution margin$?
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