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 110,700 units at a price of $45 per unit during the current year. Its income statement for the current year is as follows:
Management is considering a plant expansion program that will permit an increase of $405,000 in yearly sales. The expansion will increase fixed costs by $40,500, but will not affect the relationship between sales and variable costs.
Any help with questions 3 through 7 would be greatly appreciated! Please let me know if you need anything else.
Thank you!!!!
$4,981,500 Sales Cost of goods sold 2,460,000 Gross profit $2,521,500 Expenses: Selling expenses $1,230,000 Administrative expenses 1,230,000 Total expenses 2,460,000 $61,500 Income from operations The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Required: 1. Determine the total variable costs and the total fixed costs for the current year. Enter the final answers rounded to the nearest dollar. 3,259,500 Total variable costs Total fixed costs 1,660,500 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places Unit variable cost 29.44 Unit contribution margin 15.56 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. 106,747 X 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. 109,640 X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $61,500 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number 113,592 X units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $1 172,056 X 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. 16,500 Income 8. Based on the data given, would you recommend accepting the proposalStep by Step Solution
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