Homework Help is Here – Start Your Trial Now!
Business
Accounting
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: Sales $186,000,000 Cost of goods sold (99,000,000) Gross profit $87,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 12,400,000 Total expenses (26,400,000) $60,600,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% Cost of goods sold 75% 25% Selling expenses Administrative 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,160,000 in yearly sales, The rinn will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. expenses

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: Sales $186,000,000 Cost of goods sold (99,000,000) Gross profit $87,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 12,400,000 Total expenses (26,400,000) $60,600,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% Cost of goods sold 75% 25% Selling expenses Administrative 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,160,000 in yearly sales, The rinn will increase fixed costs by $3,000,000 but will not affect the relationship between sales and variable costs. expenses

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...
See similar textbooks
icon
Related questions
Question
Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 86,000,000 V Total fixed costs 39,400,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 86 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 394,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 424,000 V 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. 1,030,000 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? Income
Transcribed Image Text:Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 86,000,000 V Total fixed costs 39,400,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 86 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 394,000 V units 4. Compute the break-even sales (units) under the proposed program for the following year. 424,000 V 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. 1,030,000 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? Income
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: Sales $186,000,000 Cost of goods sold (99,000,000) Gross profit $87,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 12,400,000 Total expenses (26,400,000) $60,600,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% Cost of goods sold 75% 25% Selling expenses Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of 511,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,0000 but will not affect the relationship between sales and variable costs,
Transcribed Image Text: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: Sales $186,000,000 Cost of goods sold (99,000,000) Gross profit $87,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 12,400,000 Total expenses (26,400,000) $60,600,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed 70% 30% Cost of goods sold 75% 25% Selling expenses Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of 511,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,0000 but will not affect the relationship between sales and variable costs,
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Trading
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
EBK CFIN
EBK CFIN
Finance
ISBN:
9781337671743
Author:
BESLEY
Publisher:
CENGAGE LEARNING - CONSIGNMENT
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS