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: Sales $190,000,000 Cost of goods sold (99,000,000) Gross profit $91,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 20,400,000 Total expenses (34,400,000) Operating income $56,600,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but wi the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 90,000,000 v Total fixed costs 43,400,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 90 V Unit contribution margin 100 v 3. Compute the break-even sales (units) for the current year. 434,000 V units
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: Sales $190,000,000 Cost of goods sold (99,000,000) Gross profit $91,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 20,400,000 Total expenses (34,400,000) Operating income $56,600,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but wi the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 90,000,000 v Total fixed costs 43,400,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 90 V Unit contribution margin 100 v 3. Compute the break-even sales (units) for the current year. 434,000 V 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 11.2.1P: Break-even sales under present and proposed conditions Kearney Company, operating at full capacity,...
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