Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need help with Questions 6 and 7. Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed
I need help with Questions 6 and 7.
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 120,150 units at a price of $75 per unit during the current year. Its income statement for the current year is as follows: Sales $9,011,250 Cost of goods sold 4,450,000 Gross profit $4,561,250 Expenses: Selling expenses $2,225,000 Administrative expenses 2,225,000 Total expenses 4,450,000 Income from operations $111,250 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 $750,000 in yearly sales. The expansion will increase fixed costs by $75,000, but will not affect the relationship between sales and variable costs. 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. Total variable costs 5,896,250 Total fixed costs 3,003,750 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 49.07 Unit contribution margin 25.93 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. 115,841 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. 118,733 units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $111,250 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. 123,024 units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $ 3,374,789 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. 2,440,109 X Income $Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started