PLEASE answer all of the follwoing, thank you! Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed

PLEASE answer all of the follwoing, thank you!

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 81,000 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows:

Sales		$4,131,000
Cost of goods sold		2,040,000
Gross profit		$2,091,000
Expenses:
Selling expenses	$1,020,000
Administrative expenses	1,020,000
Total expenses		2,040,000
Income from operations		$51,000

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 $357,000 in yearly sales. The expansion will increase fixed costs by $35,700, 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	$
Total fixed costs	$

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	$
Unit contribution margin	$

3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. 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. units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $51,000 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units

6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. $

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. $

8. Based on the data given, would you recommend accepting the proposal?

In favor of the proposal because of the reduction in break-even point.

In favor of the proposal because of the possibility of increasing income from operations.

In favor of the proposal because of the increase in break-even point.

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.

Beck Inc. and Bryant Inc. have the following operating data:

	Beck Inc.	Bryant Inc.
Sales	$278,200	$786,000
Variable costs	111,600	471,600
Contribution margin	$166,600	$314,400
Fixed costs	117,600	183,400
Income from operations	$49,000	$131,000

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

Beck Inc.
Bryant Inc.

b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.

	Dollars	Percentage
Beck Inc.	$		%
Bryant Inc.	$		%

c. The difference in the of income from operations is due to the difference in the operating leverages. Beck Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are Bryant Inc.'s.

Check My Work2 more Check My Work uses r

a. If Canace Company, with a break-even point at $489,800 of sales, has actual sales of $620,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

1. $

2. %

b. If the margin of safety for Canace Company was 30%, fixed costs were $1,656,900, and variable costs were 70% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $496,000, and the sales mix is 80% bats and 20% gloves. The unit selling price and the unit variable cost for each product are as follows: