Break-Even Sales Under Present and Proposed Conditions
Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows:
| Sales | $188,000,000 | ||
| Cost of goods sold | (99,000,000) | ||
| Gross profit | $89,000,000 | ||
| Expenses: | |||
| Selling expenses | $14,000,000 | ||
| Administrative expenses | 16,400,000 | ||
| Total expenses | (30,400,000) | ||
| Operating income | $58,600,000 |
The division of costs between variable and fixed is as follows:
| Variable | Fixed | |||
| Cost of goods sold | 70% | 30% | ||
| Selling expenses | 75% | 25% | ||
| Administrative expenses | 50% | 50% | ||
Management is considering a plant expansion program for the following year that will permit an increase of $13,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 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.
| 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.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $58,600,000 of operating income that was earned in the current year.
6. Determine the maximum operating income possible with the expanded plant.
$
7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
$
I only need question number seven.
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How to calculate question number 7: If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?
Required: 1. Determine the total variable costs and the total fixed costs for the current year....
Required: 1. Determine the total variable costs and the total fixed 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...
Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its income statement is as follows: Sales $186,000,000 Cost of goods sold
Break-Even Sales Under Present and Proposed ConditionsPortmann Company, operating at full capacity, sold 1,000,000 units at a price of $186 per unit during the current year. Its income statement is as follows:Sales$186,000,000 Cost of goods sold(101,000,000)Gross profit$85,000,000 Expenses:Selling expenses$15,000,000Administrative expenses8,100,000Total expenses(23,100,000)Operating income$61,900,000The division of costs between variable and fixed is as follows:VariableFixedCost of goods sold70%30%Selling expenses75%25%Administrative expenses50%50%Management is considering a plant expansion program for the following year that will permit an increase of $11,160,000 in yearly sales. The expansion will increase fixed costs by $3,000,000 but...
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...
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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%...
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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...
Required: 1. Determine the total variable costs and the total fixed 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...
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 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...
look Show Me How B Calculator Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 169,200 units at a price of $45 per unit during the current year. Its Income statement is as follows: sales $7,614,000 Cost of goods sold 2,700,000 Gross profit $4.914,000 Expenses: Selling expenses $1,350,000 Administrative expenses 810,000 Total expenses 2,160,000 Income from operations $2,754,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold...
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 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...
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