Question

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. 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?
$

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Determine the Total Variable Cost and the total fixed Costs Total Variable cost 1530000 Total Fixed Cost 657500 21. Units Var64000 451 2880000 1400000 1480000 Saels Units Selling price per unit Sales Cost of goods sold Gross Profit Expenses Sellin ge

Add a comment
Know the answer?
Add Answer to:
Break-Even Sales Under Present and Proposed Conditions Howard Industries Inc., operating at full capacity, sold 64,000...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 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...

    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...

    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...

    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...

    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...

    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...

    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...

    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...

    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...

    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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT