Required:1. Determine the total variable costs and the total fixed costs for the current year.Total variable costs86,000,000Total fixed costs39,400,0002. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.Unit variable costUnit contribution margin1003. Compute the break-even sales (units) for the current year.394,000 units4. Compute the break-even sales (units) under the proposed program for the following year.X units5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,600,000 of operating income thatwas earned in the current year.Xunits6. 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?Income8. Based on the data given, would you recommend accepting the proposal?%24%24%24 Break-Even Sales Under Present and Proposed ConditionsPortmann 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 asfollows:Sales$186,000,000Cost of goods sold(99,000,000)Gross profit$87,000,000Expenses:Selling expenses$14,000,000Administrative expenses 12,400,000Total expenses(26,400,000)$60,600,000Operating incomeThe division of costs between variable and fixed is as follows:VariableFixed70%30%Cost of goods sold75%25%Selling expensesAdministrative50%50%Management is considering a plant expansion program for the following year that will permit an increase of $11,160,009 in yearly sales. Theexpansion will increase fixed costs by $3,000,000 but will nor affect the relatiorship bet veen sales and variable costs,expensesNex

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2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 394,000 units 4. Compute the break-even sales (units) under the proposed program for the following year. X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,600,000 of operating income that was earned in the current year. X units

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 394,000 units 4. Compute the break-even sales (units) under the proposed program for the following year. X units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,600,000 of operating income that was earned in the current year. X units

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2.3P

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Break-even sales under present and proposed conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of 188 per unit during the current year. Its income statement is as follows: 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 11,280,000 in yearly sales. The expansion will increase fixed costs by 5,000,000 but will not affect the relationship between sales and variable costs. Instructions 1. Determine the total variable costs and the total fixed costs for the current year. 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. 3. Compute the break-even sales (units) for the current year. 4. Compute the break-even sales (units) under the proposed program for the following year. 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the 60,000,000 of operating income that was earned in the current year. 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? 8. Based on the data given, would you recommend accepting the proposal? Explain.
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 unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program 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 Determine for 20Y5 the total fixed costs and the total variable costs.
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 unit during 20Y5. Its income statement for 20Y5 is as follows: The division of costs between fixed and variable is as follows: Management is considering a plant expansion program 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 Determine the maximum operating income possible with the expanded plant.
Margin of safety Jorgensen Company has sales of 380,000,000, and the break-even point in sales dollars is 323,000,000. Determine Jorgensen Companys margin of safety as a percent of current sales.
Johnson Corporation had beginning inventory of 20,000 at cost and 35,000 at retail. During the year, it made net purchases of 180,000 at cost and 322,000 at retail. Johnson nude sales of 300,000. Assuming a price index of 100 at the beginning of the year and 110 at the end of the year, compute Johnsons ending inventory at cost using the dollar-value LIFO retail method.