Extended Analysis:

Management is considering a plant expansion program that will permit the company to manufacture and

sell more units in $2018.$ The expansion will allow an increase of $$1,150,000$ in yearly sales but the

selling price and variable costs per unit are expected to remain the same. The expansion will increase

annual fixed costs by $$300,000.$ Again, this expansion will not affect the relationships between sales

and variable costs on a per unit or percent of sales basis.

Compute the break$-$even sales in UNITS and SALES DOLLARS given the expansion

program for $2018.$

Determine the amount of sales in units that would be necessary given the expansion program

to realize the $$1,000,000$ of operating income that was earned in $2017.$

Assume that Connect's tax rate is $20\%,$ determine the amount of sales in units that would be

necessary given the expansion program to realize an after$-$tax net income of $$1,000,000.$

Determine the maximum operating income possible with the expanded plant. Given this

result, is the target net income in $6)$ above possible to achieve?

If the proposal is accepted and sales remain at the $2017$ level, what is the operating income or

loss for $2018?$