Reference no: EM132419713

Problem: Darby Company, operating at full capacity, sold 112,050 units at a price of $108 per unit during the current year. Its income statement for the current year is as follows:

Sales  $12,101,400Cost of goods sold  5,976,000Gross profit  $6,125,400Expenses:   Selling expenses$2,988,000  Administrative expenses2,988,000  Total expenses  5,976,000Income from operations  $149,400

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 $1,080,000 in yearly sales. The expansion will increase fixed costs by $108,000, 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.