Sales Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows: $190,000,000 Cost of goods sold (100,000,000) Gross profit $90,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 19,000,000 Total expenses (33,000,000) Operating income $57.000.000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 75% Selling expenses Administrative expenses 50% 50 Management is considering a plant expansion program for the following year that wit permit an increase of $13.500.000 in yearly sales. The expansion will increase forced costs by $3.000.000 but not affect the relationship between sales and variable costs. Required: Required: 1. Determine the total variable costs and the total costs for the current year Total variable costs Totalfixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution for the current year Ut variable cost Unit contribution margin 3. Compute the break even sales units) for the current year 4. Compute the break-even sales (unit) under the proposed program for the following year units 5. Determine the amount of sales tunits) that would be necessary under the proposed program to the 157,000,000 of operating income that was meinther 6. Determine the maximum berting income possible with the expanded start 7. If the proposal is accepted and sales remain at the current level what will the operating income or lose to for the following our 1. Band on the data en oud vouc h er 3. In the proposal bete the reduction in brevet Unit variable cost Unit contribution margin 3. Compute the break-even sales (units) for the current year. units 4. Compute the break-even sales (units) under the proposed program for the following year. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $57,000,000 of operating income that wa units 6. Determine the maximum operating income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 3. 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