Break-Even Sales Under Present and Proposed Conditions
Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows:
Sales | $2,880,000 | ||
Cost of goods sold | 1,400,000 | ||
Gross profit | $1,480,000 | ||
Expenses: | |||
Selling expenses | $400,000 | ||
Administrative expenses | 387,500 | ||
Total expenses | 787,500 | ||
Income from operations | $ 692,500 |
The division of costs between variable and fixed is as follows:
Variable | Fixed | |||
Cost of goods sold | 75% | 25% | ||
Selling expenses | 60% | 40% | ||
Administrative expenses | 80% | 20% |
Management is considering a plant expansion program for the following year that will permit an increase of $900,000 in yearly sales. The expansion will increase fixed costs by $212,500 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total fixed costs and the total variable costs for the current year.
Total variable costs | $ |
Total fixed costs | $ |
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost | $ |
Unit contribution margin | $ |
3.
Compute the break-even sales (units) for the current year.
units
4.
Compute the break-even sales (units) under the proposed program for
the following year.
units
5.
Determine the amount of sales (units) that would be necessary under
the proposed program to realize the $692,500 of income from
operations that was earned in the current year.
units
6.
Determine the maximum income from operations possible with the
expanded plant.
$
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?
$
Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000...
Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. as follows Sales $2.880,000 Cost of goods sold 1,400,000 Gross profit $1,480,000 Expenses: Selling expenses $400,000 Administrative expenses 387,500 Total expenses 787.500 Income from operations $ 692,500 The division of costs between variable and feed is as follows: Variable Fixed Cost of goods sold 75% 25% Selling expenses 40% Administrative 20% expenses...
Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows Cost of goods sold Gross profit Expenses: $2,880,000 1,400,000 1,480,000 Selling expenses $400,000 387,500 Total expenses.... Income from operations 787,500 692,500 The division of costs between variable and fixed is as follows: Cost of goods sold Selling expenses Administrative expenses Variable 75% 60% 80% Fixed 25% 40% 20% Management is considering a plant...
Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows $2,880,000 1,400,000 $1,480,000 Expenses 400,000 387,500 787,500 692,500 Income from operations The division of costs between variable and fixed is as follows Cost of goods sold Selling expenses Administrative expenses Variable 75% 60% 80% Fixed 25% 40% 20% Management is considering a plant expansion program for the following year that will permit an...
Show Me How Calculator Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows Sales $2,880,000 Cost of goods sold 1.400.000 Gropofit $1.450.000 Expenses $400,000 387,500 Selling expenses Administrative expenses Total expenses Income from operations 787.500 $ 692 500 The division of costs between variable and is as follows: Variable Cost of goods sold 75 Selling...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 148,400 units at a price of $126 per unit during the current year. Its income statement is as follows: Sales $18,698,400 6,636,000 Cost of goods sold Gross profit $12,062,400 Expenses: Selling expenses Administrative expenses $3,318,000 1,974,000 Total expenses 5,292,000 Income from operations $6,770,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 4096 Selling expenses 50% 50%...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 150,400 units at a price of $81 per unit during the current year. Its income statement is as follows: Sales $12,182,400 4,320,000 Cost of goods sold Gross profit $7,862,400 Expenses: Selling expenses $2,160,000 Administrative expenses 1,296,000 Total expenses 3,456,000 Income from operations $4,406,400 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50%...
Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 118,500 units at a price of $126 per unit during the current year. Its income statement is as follows: Sales $14,931,000 Cost of goods sold 5,292,000 Gross profit $9,639,000 Expenses: Selling expenses $2,646,000 Administrative expenses 1,596,000 Total expenses 4,242,000 Income from operations $5,397,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50%...
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $189 per unit during the current year. Its income statement is as follows: Sales $189,000,000 Cost of goods sold (102,000,000) Gross profit $87,000,000 Expenses: Selling expenses $14,000,000 Administrative expenses 14,200,000 Total expenses (28,200,000) $58,800,000 Operating income The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% 25% 75% Selling expenses Administrative...
Break-Even Sales Under Present and Proposed Conditions Battonkill Company, operating at full capacity, sold 101,400 units at a price of $51 per unit during the current year. Its income statement for the current year is as follows: Sales Cost of goods solod Gross profit Expenses: $5,171,400 1,836,000 $3,335,400 Selling expenses $918,000 Administrative expenses 544,000 Total expenses 1,462,000 Income from operations $1,873,400 The division of costs between fixed and variable is as follows Fixed Variable Cost of goods sold Selling expenses...
Break-Even Sales Under Present and Proposed Conditions Portmann Company operating at full capacity, sold 1,000,000 units at a price of $187 per unit during the current year. Its income statement is as follows Sales $187,000,000 Cost of goods sold (102,000,000) Gross profit $85,000,000 Expenses Selling expenses $16,000,000 Administrative expenses 7,200,000 Total expenses (23,200.000) Operating income $61,800,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative...