Reference no: EM132657197

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 109,350 units at a price of $45 per unit during the current year. Its income statement for the current year is as follows:

Sales $4,920,750

Cost of goods sold 2,430,000

Gross profit $2,490,750

Expenses: Selling expenses$1,215,000

Administrative expenses1,215,000

Total expenses 2,430,000

Income from operations $60,750

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 $450,000 in yearly sales. The expansion will increase fixed costs by $45,000, 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.

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.

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