ompute the break-even sales (units) under the proposed program for the following year. fill in the blank 6 units Determine the amount of sales (units) that would be necessary under the proposed program to realize the $2,357,900 of income from operations that was earned in the current year. fill in the blank 7 units Determine the maximum income from operations possible with the expanded plant. $fill in the blank 8
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 127,900 units at a price of $51 per unit during the current year. Its income statement is as follows:
| Sales | $6,522,900 | ||
| Cost of goods sold | 2,312,000 | ||
| Gross profit | $4,210,900 | ||
| Expenses: | |||
| Selling expenses | $1,156,000 | ||
| Administrative expenses | 697,000 | ||
| Total expenses | 1,853,000 | ||
| Income from operations | $2,357,900 |
The division of costs between variable and fixed is as follows:
| Variable | Fixed | |||
| Cost of goods sold | 60% | 40% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 30% | 70% |
Management is considering a plant expansion program for the following year that will permit an increase of $510,000 in yearly sales. The expansion will increase fixed costs by $68,000, but will not affect the relationship between sales and variable costs.
Required:
Compute the break-even sales (units) under the proposed program for the following year.
fill in the blank 6 units
Determine the amount of sales (units) that would be necessary under the proposed program to realize the $2,357,900 of income from operations that was earned in the current year.
fill in the blank 7 units
Determine the maximum income from operations possible with the expanded plant.
$fill in the blank 8
Step by step
Solved in 4 steps
