Question

Please include the steps and do the assignment completely

oBJ.2, PR 4-2B Break-even sales under present and proposed conditions Colt Industries Inc., operating at full capacity, sold 30,000 units at a price of $56 per unit during 2012. Its income statement for 2012 is as follows 3. 13,000 mits Sales Cost of goods sold Gross profit... . Expenses $1,680,000 740,000 940,000 Selling expenses Administrative expenses. 260,000 136,000 Total expenses Income from operations 396,000 $544,000 The division of costs between fixed and variable is as follows Cost of goods sold Selling expenses Administrative expenses Fixed 40% 20% 5096 Variable 60% 80% 5096 Management is considering a plant expansion program that will perinit an increase of 1,120,000 in yearly sales. The expansion will increase fixed costs by $400,000, but will not affect the relationship between sales and variable costs Instructions 1. Determine for 2012 the total fixed costs and the total variable costs 2 2. Determine for 2012 (the unit variable cost and (b) the unit contribution margin. 2 3. Compute the break-even sales (units) for 2012 2 4. Compute the break-even sales (units) under the proposed program 2 5. Determine the amount of sales (units) that would be necessary under thep oposeod program to realize the $544,000 of income from operations that was earned in 2012. 6. Determine the maximum income from operations possible with the expanded plant. 2 7. If the proposal is accepted and sales remain at the 2012 level, what will the income or loss from operations be for 2013? 8. Based on the data given, would you recommend accepting the proposal? Explain 21

Answer 1

As per HOMEWORKLIB POLICY, solved first four sub parts. Please post remaining once as a separate question

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Part 1
		Fixed	Variable
Cost of Goods Sold
-Fixed	740000*40%	$ 296,000
-Variable	740000*60%		$444,000
Selling Expense
-Fixed	260000*20%	$   52,000
-Variable	260000*80%		$208,000
Administrative Expense
-Fixed	136000*50%	$   68,000
-Variable	136000*50%		$ 68,000
Total Variable and Fixed		$ 416,000	$720,000
Part 2
a.
Total Variable Cost		$ 720,000
No of Units Sold		30,000	Units
Unit Variable Cost	720000/30000	$       24.0
b.
Unit Sale Price		$          56
Less: Unit variable cost		$         -24
Unit contribution Margin		$          32
Part 3
Break Even Sales (Units)	Fixed Cost/Unit Contribution Margin
	416000/32	13,000	Units
Part 4
Under new programme, Variable cost per unit will remain same.
Fixed cost will increase by $400,000 to $816,000
Break Even Sales (Units)	Fixed Cost/Unit Contribution Margin
	(416000+400000)/32	25,500	Units