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I need help with number 6? I've tried multple different methods but I keep getting it wrong Break-Even Sales Under Present and Proposed Conditions. Portmann
I need help with number 6? I've tried multple different methods but I keep getting it wrong
Break-Even Sales Under Present and Proposed Conditions. Portmann Company, operating at full capacity, sold 1,000,000 units at a price of s186 per unit during the current year. Its income statement is as follows: The divisien of costs between variable and foced is as follows: Mansgement is considering a plant expansion program for the following year that will permit an increase of 511,160,000 in yearly sales. The expansion will increase foxed costi by $3,500,000 but will not affect the relationship between sales and variable cotts. Required! 1. Ootermine the total varable costs and the total fixed coss for the current year. 5. Determine the. Jamount of sales (units) that would be necessary under the proposed program to realize the $61,600,000 of operating income that was earned in current year. units 6. Determine the maximum aneratinn incrame naseihla wath the expanded plant: x 7. If the proposal is accepted and sales remain at the current level, what wal the operating income or loss be for the following year? 8. Based on the data given, would you recommend accepting the proposal? a. In faver of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibity of increasing income from operations. c. In favor of the proposal because of the inerease in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations wali increase. 6. Reject the proposal because the sales nocessary to maintain the current income from operablons would be below the current year sales. Cheose the correct Step by Step Solution
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