Required:

Determine the total variable costs and the total fixed costs for the current year.

Total variable costs

$

$86,000,000$

Total fixed costs

$

Determine $($a$)$ the unit variable cost and $($b$)$ the unit contribution margin for the current year.

Unit variable cost

$

Unit contribution margin

$

Compute the break$-$even sales $($units$)$ for the current year.

$$ units

Compute the break$-$even sales $($units$)$ under the proposed program for the following year.

$x$ units

Determine the amount of sales $($units$)$ that would be necessary under the proposed program to realize the $$62,000,000$ of operating income that was

earned in the current year.

$x$ units

Determine the maximum operating income possible with the expanded plant.

$

If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?

$ Break$-$Even Sales Under Present and Proposed Conditions

Portmann Company, operating at full capacity, sold $1,000,000$ units at a price of $$186$ per unit during the current year. Its income statement is as follows:

Expenses:

The division of costs between variable and fixed is as follows:

Management is considering a plant expansion program for the following year that will permit an increase of $$11,160,000$ in yearly sales. The expansion will

increase fixed costs by $$3,000,000$ but will not affect the relationship between sales and variable costs.

Required: