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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 109,350 units at a price of $63 per unit during the current year. Its income statement for the current year is as follows: Sales $6,889,050 Cost of goods sold 3,402,000 Gross profit $3,487,050 Expenses: Selling expenses $1,701,000 Administrative expenses 1,701,000 Total expenses 3,402,000 Income from operations $85,050 The division of costs between fixed and variable is as follows: Variable Fixed 70% 75% 30% 25% Cost of goods sold Selling expenses Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $630,000 in yearly sales. The expansion will increase fixed costs by $63,000, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed 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 (b) the unit contribution margin for the current year. Enter the final answers rounded to two decimal places. Unit variable cost Unit contribution margins 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number. units 4. Compute the break-even sales (units) under the proposed program for the following year. Enter the final answers rounded to the nearest whole number. units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $85,050 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number. units 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar. 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? Enter the final answer rounded to the nearest dollar. Income

Answer 1

1. Total variable cost =$4507650

Total fixed cost =$2296350

2. Unit variable cost = 41.22 per unit

Unit contribution = 21.78 per unit

3. Break even sales = 105434 units

4. New break even sales = 108326 units

5. Sales (amount) = $7070578

6. Income from operation = $611073

7. Income = $22050

Here i enclosed the solved problem for further reference

Cart Tatil variasse cost o calculation of Takut Tatal fixed cost cons. 10,20600 Seulging Expos : 425250 Achenbation Bypo esosco 2381400 1275750 8soso 2296,350 45076 50 2 Unit variable call =). Variable cost - 41.22 Porunt uso 7650 109380 Consibution 63-41.22 = 21.78 Per and o Break even dell Conits) - fixed Cash Consibution = 105434_Unit 2.99635o 21-78. y new fixed costs 229 6.350 +63000 - 2359 350 new Break.euen Sale y 2399 990 o 21-78 108326 wrats

S Sales (amount) Axed cost t Profit consibution per unit, 2._ 2359 350+ 850SD 21-78 - 11223) unis Sales (amount) = Sales & Selling Price - 11223LX.63 - 70,70,578 (6) of Sales). 688,9050+6304o : 751,90 SO Salesy 7519050 leur: variable caut: (4548627) consibution: 2970423. len: fixed cost = 2359350 Poopil a 611,073. hence maximum Income foom operation 2 $611073

(for 109,350 hits - 68.89 oso 4507650 Las variable calls 220.es (for 109 350 Unully consibution 4892,700 23,81,400. les: fixed carb ). 2359350 Prajit : 22050