Gaelic industries inc operating at full capacity sold 22350

Reference no: EM13603792

Gaelic Industries Inc., operating at full capacity, sold 22,350 units at a price of $150 per unit during 2010. Its income statement for 2010 is as follows:The division of costs between fixed and variable is as follows:

Management is considering a plant expansion program that will permit an increase of $900,000 in yearly sales. The expansion will increase fixed costs by $242,500, but will not affect the relationship between sales and variable costs.

1. Determine for 2010 the total fixed costs and the total variable costs.

Fixed costs: $
Variable costs: $

2. Determine for 2010 (a) the unit variable cost and (b) the unit contribution margin.

Unit variable cost: $
Unit contribution margin: $

3. Compute the break-even sales (units) for 2010.

4. Compute the break-even sales (units) under the proposed program.

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $652,500 of income from operations that was earned in 2010.units

6. Determine the maximum income from operations possible with the expanded plant.

7. If the proposal is accepted and sales remain at the 2010 level, what will the income or loss from operations be for 2011?$ SelectIncomeLossItem 10

8. Based on the data given, would you recommend accepting the proposal? Explain.

Reference no: EM13603792

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