1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 88,000,000 Total fixed costs $4 40,100,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 88 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 401,000 units
1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs 88,000,000 Total fixed costs $4 40,100,000 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year. Unit variable cost 88 Unit contribution margin 100 3. Compute the break-even sales (units) for the current year. 401,000 units
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 3RE: Shaquille Corporation began the current year with inventory of 50,000. During the year, its...
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Can you please assist with questions 5-7? Thank you!
![Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its
income statement is as follows:
Sales
$188,000,000
Cost of goods sold
(101,000,000)
Gross profit
$87,000,000
Expenses:
Selling expenses
$15,000,000
Administrative expenses 12,100,000
Total expenses
(27,100,000)
Operating income
$59,900,000
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
70%
30%
Selling expenses
75%
25%
Administrative
50%
50%
expenses
Management is considering a plant expansion program for the following year that will permit an increase of $13,160,000 in
yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and
variable costs.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd38182f4-038d-4a39-9ba0-300bab26f72a%2F0d12ba09-4282-4e3a-9168-c3dda1ab65df%2Fi4wjiu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its
income statement is as follows:
Sales
$188,000,000
Cost of goods sold
(101,000,000)
Gross profit
$87,000,000
Expenses:
Selling expenses
$15,000,000
Administrative expenses 12,100,000
Total expenses
(27,100,000)
Operating income
$59,900,000
The division of costs between variable and fixed is as follows:
Variable
Fixed
Cost of goods sold
70%
30%
Selling expenses
75%
25%
Administrative
50%
50%
expenses
Management is considering a plant expansion program for the following year that will permit an increase of $13,160,000 in
yearly sales. The expansion will increase fixed costs by $4,000,000 but will not affect the relationship between sales and
variable costs.
![1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs
88,000,000
Total fixed costs
40,100,000
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost
88
Unit contribution margin
100
3. Compute the break-even sales (units) for the current year.
401,000
units
4. Compute the break-even sales (units) under the proposed program for the following year.
441,000
units
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $59,900,000 of
operating income that was earned in the current year.
units
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?
Income
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd38182f4-038d-4a39-9ba0-300bab26f72a%2F0d12ba09-4282-4e3a-9168-c3dda1ab65df%2Fx11labf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs
88,000,000
Total fixed costs
40,100,000
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost
88
Unit contribution margin
100
3. Compute the break-even sales (units) for the current year.
401,000
units
4. Compute the break-even sales (units) under the proposed program for the following year.
441,000
units
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $59,900,000 of
operating income that was earned in the current year.
units
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?
Income
%24
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