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Compute the break-even sales for the current year

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Reference no: EM132952967

Management is considering a plant expansion program for the following year that will permit an increase of $13,300,000 in yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and variable costs.

Required:

Problem 1. Determine the total variable costs and the total fixed costs for the current year.

Problem 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.

Problem 3. Compute the break-even sales (units) for the current year.

Problem 4. Compute the break-even sales (units) under the proposed program for the following year.

Problem 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $56,700,000 of operating income that was earned in the current year.

Problem 6. Determine the maximum operating income possible with the expanded plant.

Reference no: EM132952967

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