reak-Even Sales Under Present and Proposed Conditions 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 (102,000,000) Gross profit $88,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,700,000 Total expenses (29,700,000) Operating income $58,300,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,400,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. Required: 4. Compute the break-even sales (units) under the proposed program for the following year. fill in the blank ? units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $58,300,000 of operating income that was earned in the current year. fill in the blank ? units 6. Determine the maximum operating income possible with the expanded plant. $ fill in the blank ?
Break-Even Sales Under Present and Proposed Conditions
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 (102,000,000)
Gross profit $88,000,000
Expenses:
Selling expenses $15,000,000
Administrative expenses 14,700,000
Total expenses (29,700,000)
Operating income $58,300,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses 50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $11,400,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs.
Required:
4. Compute the break-even sales (units) under the proposed program for the following year. fill in the blank ? units
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $58,300,000 of operating income that was earned in the current year. fill in the blank ? units
6. Determine the maximum operating income possible with the expanded plant.
$ fill in the blank ?
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?
$ fill in the blank ? income or loss ?
if possible would you please be able to answer the last 4 question I'm stuck on ?
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