Reference no: EM133105754
Question - Break-Even Sales Under Present and Proposed Conditions - Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Its income statement is as follows:
|
Sales
|
|
$190,000,000
|
|
Cost of goods sold
|
|
(99,000,000)
|
|
Gross profit
|
|
$91,000,000
|
|
Expenses:
|
|
|
|
Selling expenses
|
$15,000,000
|
|
|
Administrative expenses
|
18,900,000
|
|
|
Total expenses
|
|
(33,900,000)
|
|
Operating income
|
|
$57,100,000
|
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 $11,400,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 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.
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
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 $57,100,000 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?
|
Exchange commission under the securities act
: Will the offering need to be registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933?
|
|
Improving organizational culture
: Analyze the alignment between the organizations, mission, vision, values, strategies, and the proposed Change Management Plan.
|
|
What is the cost of unused capacity
: If the actual number of customer orders were 6000, customer complaints 350, and credit checks 420, what is the cost of unused capacity
|
|
Compute the break-even sales for the current year
: Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $190 per unit during the current year. Compute the break-even sales
|
|
Determine the amount of sales
: Determine the amount of sales (units) that would be necessary under the proposed program to realize the $57,100,000 of operating income
|
|
How much additional external funding does the firm require
: Assume that revenue growth is 5%, depreciation is 10% of fixed assets, How much additional external funding does the firm require in 2015
|
|
Prepare the non-current assets note
: Motor vehicles are depreciated at 20% per annum using the reducing balance method. Prepare the non-current assets note
|
|
How much is Es share in the partnership profit
: As of December 31, 2015, D, E and F has adjusted capital balances of P100,000, P250,000 and P150,000, How much is Es share in the partnership profit
|
|
Compute the goodwill for the partnership
: The partnership agreed to pay the amount due to Sally, except for RM40,000, which remains as a loan to the partnership. Compute the goodwill for the partnership
|