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 91,800 units at a price of $108 per unit during the current year. Its income statement for the current year is as follows: Sales $9,914,400 Cost of goods sold 4,896,000 Gross profit $5,018,400 Expenses: Selling expenses $2,448,000 Administrative expenses 2,448,000 Total expenses 4,896,000 Income from operations $122,400 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 and variable costs.
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