Question

**Please use numbers given** Please answer 1-8, thank you in advance!! :)

Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 86,400 units at a price of $96 per unit during the current year. Its income statement for the current year is as follows: Sales $8,294,400 Cost of goods sold 4,096,000 $4,198,400 Gross profit Expenses: Selling expenses Administrative expenses $2,048,000 2,048,000 Total expenses 4,096,000 $102,400 Income from operations The division of costs between fixed and variable is as follows: Variable Fixed 70% 30% Cost of goods sold Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $672,000 in yearly sales. The expansion will increase fixed costs by $67,200, but will not affect the relationship between sales and variable costs.

Answer 1

Determine the Total Variable Cost and the total fixed Costs Total Variable cost 5427200 Total Fixed Cost 2764800 Units Varaible Cost and Unit Contribution Margin Unit Variable Cost (Variable Cost/Units) 62.81 Unit Contribution Margin 33.19 (Sales - Variable Cost)/units Break even sales in units (Fixed cost / CM per unit) 83302 Units Break Even Sales under proposed Program Fixed Cost(2764800+67200) 2832000 Break Even units (Fixedc ost / CM per unit) 85327 | 5 Sales units to Sell to get $102400 income From operations (Fixed cost+ Terget income)/ CM per unit 88412 Units 6 Detemine the Maximum Income from operations from the Expanded Plant Maximum sales Revenue 8294400+672000 8966400 Maximum Units Can sold 8966400/96 93400 Fixed Cost(2764800+67200) 2832000 operating Income = Units * CM per unit - Fixed Cost = 267946 Answer 7 Proposal is Acepted and Sales Remains the Sales operating Income = Units * CM per unit - Fixed Cost = 35200 income 8 Would you recommend Accepting the Proposal B) In Favor of the Proposal because of the possibility of increasing income from operations

86400 96 8294400 4096000 4198400 Saels Units Selling price per unit Sales Cost of goods sold Gross Profit Expenses Sellin gexpenses Administraative Expenses total Expenses Income From operations 2048000 2048000 4096000 102400 Cost of goods sold Sellin gexpenses Administraative Expenses Total Division of Fixed and Variable Cost Variable 70% 2867200 75% 1536000 50% 1024000 5427200 Proposed programme 672000 fixed cost Increase Fixed cost 30% 25% 50% 1228800 512000 1024000 2764800 Sales Will increase 67200