Question

Determine the amount of sales (units) that would be necessary under Break Even Sales Under Present and proposed Conditions Darby Company, operating a packy, sold 110,700 units at a price of $114 perunt during the current years income statement for the current year is as Sales $12,619.000 Cost of goods sold Gross prot $6,387,000 Expenses $3,116.000 Administrative expenses 3,116.000 local expenses 6,232,000 Income from operations $155.000 The division of costs between faced and variable is as follows: Variable Fixed Cost of goods sold 30% Selling expenses 25% Administrative expenses SON Management is considering a plant expansion program that will permet an increase of $1,026,000 in Yearly sales. The expansion will increase foed costs by $102,600, but will not affect the relationship between Required: 1. Determine the total variable costs and the total fored costs for the current year. Enter the final answers rounded to the nearest dollar Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and the unit contribution margin for the current year. Enter the final answers rounded to two decimal places Unt variable cost Unt contribution margin 3. Compute the break even sales units) for the current year. Enter the final answers rounded to the nearest whole number Check My Work

Answer 1

Determine the Total Variable Cost and the total fixed Costs Total Variable cost 8257400 Total Fixed Cost 4206600 Units Varaible Cost and Unit Contribution Margin Unit Variable Cost (Variable Cost/Units) 74.59 Unit Contribution Margin 39.41 (Sales -Variable Cost) /units Break even sales in units (Fixed cost / CM per unit) 106739 Units Break Even Sales under proposed Program Fixed Cost(4206600+102600) 4309200 Break Even units (Fixedc ost / CM per unit) 109343 5 Sales units to Sell to get $115800 income From operations (Fixed cost+ Terget income)/ CM per unit 113296 Units 6 Detemine the Maximum Income from operations from the Expanded Plant Maximum sales Revenue 12619800+1026000 13645800 Maximum Units Can sold 13645800/114 119700 Fixed Cost(4206600+102600) 4309200 operating Income = Units * CM per unit -Fixed Cost = 408177 Answer | 7 Proposal is Acepted and Sales Remains the Sales operating Income = Units * CM per unit - Fixed Cost = 53200 income 8 Would you recommend Accepting the Proposal B) In Favor of the Proposal because of the possibility of increasing income from operations

110700 114 12619800 6232000 6387800 Saels Units Selling price per unit Sales Cost of goods sold Gross Profit Expenses Sellin gexpenses Administraative Expenses total Expenses Income From operations 3116000 3116000 6232000 155800 Cost of goods sold Sellin gexpenses Administraative Expenses Total Division of Fixed and Variable Cost Variable 70% 4362400 75% 2337000 50% 1558000 8257400 Proposed programme 1026000 fixed cost Increase Fixed cost 30% 25% 50% 1869600 779000 1558000 4206600 Sales Will increase L 102600