5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $3,304,800 of income from operations that was earned in the current year. fill in the blank 7 units 6. Determine the maximum income from operations possible with the expanded plant. $fill in the blank 8 7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year? $fill in the blank 9
Break-Even Sales Under Present and Proposed Conditions
Darby Company, operating at full capacity, sold 112,800 units at a price of $81 per unit during the current year. Its income statement is as follows:
| Sales | $9,136,800 | ||
| Cost of goods sold | 3,240,000 | ||
| Gross profit | $5,896,800 | ||
| Expenses: | |||
| Selling expenses | $1,620,000 | ||
| Administrative expenses | 972,000 | ||
| Total expenses | 2,592,000 | ||
| Income from operations | $3,304,800 |
The division of costs between variable and fixed is as follows:
| Variable | Fixed | |||
| Cost of goods sold | 60% | 40% | ||
| Selling expenses | 50% | 50% | ||
| Administrative expenses | 30% | 70% |
Management is considering a plant expansion program for the following year that will permit an increase of $810,000 in yearly sales. The expansion will increase fixed costs by $108,000, but will not affect the relationship between sales and variable costs.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $3,304,800 of income from operations that was earned in the current year.
fill in the blank 7 units
6. Determine the maximum income from operations possible with the expanded plant.
$fill in the blank 8
7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
$fill in the blank 9
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