Darby Company, operating at full capacity, sold 165,500 units at a price of $87 per unit during the current year. Its income statement is as follows: Sales $14,398,500 Cost of goods sold 5,104,000 Gross profit $9,294,500 Expenses: Selling expenses $2,552,000 Administrative expenses 1,537,000 Total expenses 4,089,000 $5,205,500 Income from operations ) The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses S0% S0% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,305,000 in yearly sales. The expansion will increase fixed costs by $174,000, 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. 4,799,500 4,393,500 Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 29 Unit contribution margin 26.55 3. Compute the break-even sales (units) for the current year. 72,680 units

Darby Company, operating at full capacity, sold 165,500 units at a price of $87 per unit during the current year. Its income statement is as follows: Sales $14,398,500 Cost of goods sold 5,104,000 Gross profit $9,294,500 Expenses: Selling expenses $2,552,000 Administrative expenses 1,537,000 Total expenses 4,089,000 $5,205,500 Income from operations ) The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses S0% S0% Administrative 30% 70% expenses Management is considering a plant expansion program for the following year that will permit an increase of $1,305,000 in yearly sales. The expansion will increase fixed costs by $174,000, 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. 4,799,500 4,393,500 Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 29 Unit contribution margin 26.55 3. Compute the break-even sales (units) for the current year. 72,680 units

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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