P11-2 Break-even sales under present and proposed conditions Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unin during 20Y5. Its income statement for 20Y5 is as follows: $98,640,000 Sales 44,500,000 Cost of goods sold Gross profit Expenses: Selling expenses Administrative expenses $54,140,000 $8,000,000 3,000,000 11,000,000 Total expenses Income from operations $43,140,000 The division of costs between fixed and variable is as follows: Fixed Variable Cost of goods sold Selling expenses Administrative expenses 28% 72% 25% 75% 80% 20% Management is considering a plant expansion prograth that will permit an increase of $8,631,000 (35,000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000, but will not affect the relationship between sales and variable costs. Instructions 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $43,140,000 of income from operations that was earned in 20Y5. aswa.9. 6. Determine the maximum income from operations possible with the expanded plant. 7. If the proposal is accepted and sales remain at the 20Y5 level, what will the income or loss from operations be for 20Y6? 8. Based on the data given, would you recommend accepting the proposal? Explain