need number 6 & 7

Printem Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 161,800 units at a price of $117 per unit during the current year. Its Income statement is as follows: Sales $18,930,600 6,708,000 $12,222,600 Cost of goods sold Gross profit Expenses: Selling expenses $3,354,000 Administrative expenses 2,028,000 Total expenses 5,382,000 Income from operations $6,840,600 The division of costs between variable alla fixed is as follows: Variable Fixed Cost of goods sold 6096 40% Selling expenses 50% 50% Administrative 30% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,755,000 in yearly tales, The expansion will increase fixed costs by $234,000, but will not affect the relationship between sales and variable costs. 7096 Management is considering a plant expansion program for the following year that will permit an increase of $1,755,000 in yearly sales. The expansion will increase fixed costs by $234,000, 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. Total variable costs 6,310,200 7 Total fixed costs 5,779,800 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 39 Unit contribution margin $ 78 3. Compute the break-even sales (units) for the current year. 74,100 units I 4. Compute the break-even sales (units) under the proposed program for the following year. 77,100 units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $5,840,600 of income from operations that was earned in the current year. 164,800 units 6. Determine the maximum income from operations possible with the expanded plant 6,255,600 X 6. Determine the maximum Income from operations possible with the expanded plant. 6,255,600 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? 508560 x Income 8. Based on the data given, would you recommend accepting the proposal? a. In favor of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibility of increasing income from operations, c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer. b Feedback Check My Work 1. Multiply the percentages for fixed and variable costs by each cost. 2.a Divide the total variable costs by number of units. 2. b. Sales price per unit minus variable costs per unit equals contribution margin per unit 3. Fixed costs divided by unit contribution margin equals break-even point