Reference no: EM132510900

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 95,850 units at a price of $48 per unit during the current year.

Its income statement for the current year is as follows:

Sales $4,600,800

Cost of goods sold 2,272,000

Gross profit $2,328,800

Expenses: Selling expenses$1,136,000

Administrative expenses 1,136,000

Total expenses 2,272,000

Income from operations $56,800

The division of costs between fixed and variable 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 that will permit an increase of $384,000 in yearly sales. The expansion will increase fixed costs by $38,400, but will not affect the relationship between sales and variable costs.

Required:

Question 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$______Total fixed costs$_______

Question 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$____Unit contribution margin$_______

Question 3. Compute the break-even sales (units) for the current year. Enter the final answers rounded to the nearest whole number.

_______units

Question 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

Question 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $56,800 of income from operations that was earned in the current year. Enter the final answers rounded to the nearest whole number.

_______units

Question 6. Determine the maximum income from operations possible with the expanded plant. Enter the final answer rounded to the nearest dollar.